Germany’s industrial sector is signaling deepening concerns as preliminary data released by Destatis reveals a concerning downturn in new orders and a contraction in real turnover during August 2025. The adjusted order intake in manufacturing experienced a 0.8% decline compared to July 2025, a figure exacerbated when excluding large-scale contracts, revealing a 3.3% decrease. This trend is further underscored by a 2.3% fall in orders over the three-month period ending August 2025, with a more pronounced 2.0% drop when large orders are removed. A revision of prior data confirmed a steeper-than-initially reported 2.7% decline in July.
The weakness is heavily attributed to a significant drop in new orders within the automotive industry – down 6.4% seasonally and calendar-adjusted – alongside contractions in sectors producing data processing equipment, electronics, optics and pharmaceuticals, collectively weighing on the overall performance. While increases in orders for metal products, specialized vehicle construction and electrical equipment offered a minor offset, they failed to meaningfully counteract the broader decline.
Investment goods, a crucial barometer of future industrial activity, fell by 1.5% month-on-month, while consumer goods orders plummeted by a more substantial 10.3%. A rise in orders for capital goods provides a minor glimmer of hope.
The weakening demand is not limited to the domestic market. Foreign orders decreased by 4.1%, with a more significant drop observed from outside the Eurozone (5.0% compared to 2.9% from within). This highlights the increasingly precarious position of German exporters amid global economic headwinds and rising geopolitical uncertainty.
The real turnover within the manufacturing sector also contracted by 0.8% in August 2025, representing a 1.1% decrease compared to August 2024. Revisions to the July data, particularly stemming from corrections within the machinery sector, paint an even more pessimistic picture, illustrating a systemic fragility within previously believed resilient areas.
These figures are prompting renewed scrutiny of government economic policies. Critics argue that reliance on export-driven growth, coupled with a delay in addressing structural challenges within key industries, has left the sector vulnerable. The fragility within the automotive sector, traditionally a cornerstone of the German economy, raises questions about the industry’s preparedness for the transition to electric vehicles and the associated technology shifts and necessitates a broader examination of the country’s industrial strategy moving forward. Further declines could trigger a broader recessionary spiral, underscoring the urgency of decisive action.