German Industrial Orders Decline 3% in Q3 Despite September Rebound

Overall Decline in Third Quarter

Germany's industrial orders experienced a notable decline of 3 percent in the third quarter of 2025 compared to the previous quarter. This figure, released by the Federal Statistical Office (Destatis) on November 5, 2025, highlights persistent challenges for Europe's largest economy. When excluding large-scale orders, the decline in new orders for the third quarter was 1.5 percent.

September Sees Modest Rebound

Despite the quarterly contraction, September offered a glimmer of positive news with a 1.1 percent month-on-month increase in industrial orders. This marked the first rise in five months, exceeding analysts' predictions. The rebound was primarily fueled by specific sectors:

• The automotive industry saw a significant rise of 3.2 percent, recovering from a 6.4 percent fall in August.
• Orders for electrical equipment surged by 9.5 percent.
• The manufacture of aircraft, ships, trains, and military vehicles also contributed positively with a 7.5 percent increase.
• Consumer goods orders rose by 6.2 percent, and intermediate goods by 1.4 percent.

Conversely, some energy-intensive sectors continued to struggle, with orders in the fabricated metal products industry plunging by 19 percent and metal production and processing down by 5.6 percent in September.

Domestic vs. Foreign Demand

An analysis of demand sources reveals a mixed picture. In September, foreign orders increased by 3.5 percent, with orders from the Euro area rising by 2.1 percent and those from outside the Euro area by 4.3 percent. However, this positive trend in international demand was offset by a decline in domestic orders, which fell by 2.5 percent.

Fragile Outlook and Government Measures

The Federal Ministry for Economic Affairs and Energy commented that 'a clear trend in industrial demand cannot yet be identified,' emphasizing that the outlook for German manufacturing 'remained fragile amid ongoing geopolitical uncertainties and other headwinds.' The ministry also cautioned against interpreting the September data as a definitive upswing.

In response to persistently high energy costs, Economy Minister Katherina Reiche announced on Monday that Germany plans to introduce an industrial electricity price starting January 1, 2026, supported by government subsidies. However, this measure has drawn skepticism, with German news outlet Handelsblatt suggesting it is 'merely an expensive consolation' and that the high electricity costs and multi-billion euro subsidies may be unsustainable.

Economists echoed concerns about the broader economic environment. Jens Oliver-Niklasch, an LBBW bank economist, stated that 'German industry remains in a difficult position' and that 'The global environment is currently unfavourable for German companies, and there are a lack of growth-promoting reforms.' Carsten Brzeski, an ING bank economist, described the September data as showing 'weak signs of life' but warned that 'structural weaknesses will put a lid on German industrial production for a while.'