Global industrial production: New orders in the manufacturing sector – Germany in an international comparison

German economy under pressure – How other industrialized nations are holding up

New orders in the manufacturing sector are a key indicator of a country's economic performance. It reflects both future production activity and companies' willingness to invest. Germany, as one of the leading industrial nations, is under special observation in this regard. In November 2024, new orders in the German manufacturing sector recorded a significant decline of 5.4% month-on-month and 1.7% year-on-year. A decline of 1.5% was already recorded in October. These figures indicate continued economic weakness.

In order to better classify German developments, an international comparison is crucial. How do other major economies such as the USA, China, Japan, South Korea and Singapore perform? Which countries are showing resilience or even growth while Germany is weakening? This analysis highlights the developments, challenges and opportunities in the respective countries.

Developments in the USA

In the USA there was an inconsistent picture in autumn 2024. While manufacturing orders rose 0.5% in October, they fell 0.4% in November. There was also a year-on-year decline of 0.4%. These fluctuations reflect the uncertainties currently weighing on the US economy.

The presidential election in November 2024 played an important role, causing uncertainty and deterring companies from investing. Additionally, external factors such as the Boeing machinists' strike in October impacted supply chains. The Federal Reserve's tightening of monetary policy, which further increased interest rates, also dampened companies' willingness to invest.

Despite these challenges, the US economy is showing relative resilience. The technology sector and the energy industry in particular remain important pillars of industrial production.

Developments in China

China presented positive dynamics in the manufacturing sector in autumn 2024. The Purchasing Managers' Index (PMI) rose to 50.3 in November, signaling expansion. In particular, the new orders index, which rose to 50.8, indicates a recovery in demand.

This positive development is largely due to government support. The Chinese government introduced a range of measures to support the economy, including tax breaks, infrastructure investments and subsidies for strategic industries. The general equipment, automotive and electrical machinery industries in particular recorded strong growth in autumn 2024 with production indices of over 54 points.

The Chinese domestic market is proving to be a stabilizing factor that mitigates the effects of global uncertainties. The long-term focus on promoting technology and innovation also strengthens the competitiveness of Chinese industry.

Developments in Japan

Japan recorded a mixed picture in autumn 2024. While machine tool orders rose in October, they fell for the second consecutive month in November. Weak domestic and external demand, particularly in the semiconductor and automotive sectors, contributed to this decline.

However, there were bright spots: some industrial sectors such as pulp, paper, power generation and ferrous and non-ferrous metals recorded significant increases. The power generation sector in particular grew strongly, with an increase of 116% in October. This development shows that despite challenges, Japan's economy has flexible and competitive sectors.

However, Japan continues to face structural challenges, such as an aging population and stagnating domestic demand. The government is therefore relying on increased automation and digitalization to ensure competitiveness.

Developments in South Korea

South Korea showed signs of recovery in November 2024, although production volumes continued to decline. The purchasing managers' index rose to 50.6, signaling slight expansion. However, the weak global economy and subdued demand from key export markets such as the USA, Europe and China continued to weigh on South Korean industry.

Despite these challenges, South Korea managed to secure significant international contracts. Orders for plant construction projects abroad rose by 12.7% to $34 billion in 2024. These successes underline South Korea's innovative strength and strong position in specialized industries such as shipbuilding and electronics.

Developments in Singapore

Singapore recorded robust development in the manufacturing sector in autumn 2024. The Purchasing Managers' Index rose to 51.0 in November, marking the 15th consecutive expansion. The electronics industry in particular, which accounts for a third of industrial activity, contributed to the positive development with an increase to 51.6.

However, there are challenges here too. Delivery delays and a continued decline in employment in the manufacturing sector pose problems. Nevertheless, Singapore remains an attractive industrial location due to its focus on high technology and digitalization.

Developments in the EU

The EU as a whole showed a significant slowdown in the manufacturing sector in autumn 2024. The HCOB PMI® was below the 50.0 threshold for the 30th consecutive month in December 2024, indicating continued contraction. Export-oriented industries were particularly hard hit, suffering from weak global demand and geopolitical uncertainties.

However, the differences between the individual Member States are significant. While countries such as Ireland and the Netherlands performed relatively well, countries with a heavy dependence on energy imports such as Germany and Italy particularly struggled.

Comparison of developments

Suitable for:

• The HCOB PMI® (Purchasing Managers' Index®) is an important economic indicator from Hamburg Commercial Bank and S&P Global
• Which indicator shows us the economy first? Timeliness is crucial: Purchasing Managers Index (PMI) vs. Gross Domestic Product (GDP)

Reasons for the differences

The different developments can be explained by a variety of factors:

• Global economy: The global economy is in a phase of cooling, which is particularly affecting export-oriented countries such as Germany.
• Trade policy: Geopolitical uncertainties and trade conflicts, particularly between the USA and China, have a negative impact on international trade.
• Monetary policy: The increase in key interest rates in the USA and the EU makes loans more expensive and dampens the willingness to invest.
• Government support: Countries like China and South Korea benefit from targeted government support measures and a diversified economic structure.

The decline in new orders in the manufacturing sector in Germany is a serious signal. While global uncertainties are weighing on the entire global economy, international comparison shows that countries with strong domestic demand, innovation and targeted government support are more resilient.

Germany must act strategically to ensure its competitiveness. Investments in education, research and digitalization, the promotion of innovations and diversification of export markets are crucial measures. This is the only way German industry can withstand the challenges of the future and secure long-term growth and prosperity.

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A differentiated picture of global industrial production

In the last months of 2024, global industrial production will be in a complex state that is characterized by different dynamics in the individual economic areas. A detailed look at new orders in the manufacturing sector, a key early indicator of economic development, reveals a nuanced picture. While some economies are experiencing robust expansion, others are struggling with a decline in demand and economic slowdown. The following analysis highlights developments in selected countries and regions and attempts to understand the underlying causes of these divergences.

Germany: Signs of an economic slowdown are increasing

The development in Germany gives cause for concern. Manufacturing orders recorded significant declines in both October and November 2024. In October, orders fell by 1.5 percent compared to the previous month, while the decline in November was 5.4 percent. If you compare November 2024 with the same month last year, there is a minus of 1.7 percent. These figures are a clear signal of a slowing dynamic in Germany's industrial sector, which has traditionally been a mainstay of the German economy. Experts see this development as confirmation of the slowing economy, which is influenced by a variety of factors. These include, among other things, ongoing inflation, increased energy prices and uncertainties in global trade.

USA: A mixed picture amid economic volatility

A differentiated picture also emerges in the United States, although the fluctuations here are less pronounced than in Germany. After a slight increase in incoming orders in October of 0.5 percent compared to the previous month, this was followed by a slight decline of 0.4 percent in November. Compared to the previous year, there is also a decrease of 0.4 percent. These numbers indicate some volatility in American industry. It is believed that the uncertainty leading up to the presidential election caused many companies to take a wait-and-see approach, which translated into more cautious investments. In addition, specific events such as the strike at Boeing in October weighed on some industries, while the Federal Reserve's restrictive monetary policy tended to dampen the willingness to invest.

China: Continuous growth thanks to strong domestic demand

In contrast to the rather subdued developments in Europe and the USA, China presents itself with robust dynamics in the manufacturing sector. The Purchasing Managers' Index (PMI) was above the growth threshold of 50 in both October and November 2024, rising from 50.1 in October to 50.3 in November. This signals continued expansion of the sector. Particularly noteworthy is the strong domestic demand in China, which represents an important stabilizing factor. Chinese industry also benefits from targeted government support measures and investments in key industries. The focus on technological innovation and the development of new markets also contribute to the positive picture.

Japan: Between global uncertainties and sectoral differences

Japan's industrial production shows uneven development over the period under review. While new orders in the mechanical engineering industry were at JPY 122.5 billion in October, they fell to JPY 119.3 billion in November. These fluctuations reflect the uncertainties in the global economy, which also severely affect Japan. The demand for Japanese products is influenced by economic developments in important sales markets. At the same time, there are significant differences within the Japanese industrial sector. Some industries, such as electronics, are under pressure, while other areas, such as energy, could benefit from rising prices.

South Korea: Tender recovery after difficult months

South Korea's manufacturing sector shows signs of slight recovery in November 2024. The purchasing managers' index rose from 48.3 in October to 50.6 in November, exceeding the growth threshold. This indicates a stabilization and possibly the beginning of an upward movement, after the sector previously struggled with declining orders for a few months. The South Korean economy is heavily export-oriented and therefore vulnerable to fluctuations in global demand. The recovery could be due to a slight increase in demand in important buyer countries. However, it remains to be seen whether this positive trend is sustainable.

Singapore: Robust expansion in the heart of Southeast Asia

Singapore continues its impressive manufacturing growth story. The purchasing managers' index was clearly in expansionary territory in both October (50.8) and November (51.0). This underlines the resilience and competitiveness of Singapore's industry, which is heavily focused on high-tech manufacturing and services. Singapore benefits from its strategic location as a trading center in Southeast Asia and an investment-friendly climate. The focus on future industries such as the semiconductor industry contributes significantly to success.

European Union: Continued weakness in the industrial sector

The European Union as a whole continues to show signs of weakness in the manufacturing sector. Declining incoming orders were recorded in both October and November 2024. This trend points to a continued economic challenge for European industry. High inflation, the energy crisis and geopolitical uncertainties are putting pressure on many companies. In addition, there are significant differences between the individual member states within the EU. While some countries are comparatively robust, others are struggling with significant declines in production.

Causes for the different development: A complex interplay of factors

The observed differences in the development of industrial production are the result of a complex interaction of various factors:

Global economic situation

The general state of the global economy plays a crucial role. A global economic slowdown, as is currently being observed, tends to have a negative impact on industrialized nations, especially on heavily export-oriented countries such as Germany. Conversely, phases of global recovery can boost demand and stimulate production.

Trade policy and international relations

Trade conflicts, tariffs and other protectionist measures can affect international trade and disrupt supply chains. Geopolitical tensions and wars lead to uncertainty and can dampen companies' willingness to invest. A stable and rules-based international trading system is of great importance for the prosperous development of global industry.

Monetary and fiscal policy

The measures taken by central banks and governments have a significant impact on economic development. An expansionary monetary policy with low interest rates can stimulate investment and consumption, while a restrictive policy to combat inflation tends to have a slowing effect. Fiscal policy, i.e. government spending and revenue, can also influence demand and economic growth. Different monetary and fiscal policy approaches in individual countries can lead to diverging developments.

Structural factors

The economic structure of a country, the composition of the industrial sectors and the ability to innovate play an important role. Countries with a diversified industrial structure and a high proportion of future industries tend to be more resilient to economic fluctuations. The degree of digitalization and automation in the industry also influences competitiveness.

Specific events and crises

Unexpected events such as natural disasters, pandemics or political crises can have a significant impact on industrial production. For example, the COVID-19 pandemic has led to massive production outages and supply chain problems. The war in Ukraine and the associated energy crisis also placed a heavy burden on European industry.

Challenges and opportunities in a changing global economy

The analysis of new manufacturing orders in October and November 2024 paints a complex picture of global industrial production. While some countries, particularly in Asia, continue to benefit from robust demand, others, particularly in Europe, are struggling with economic weakness and the consequences of global crises. The different developments illustrate the diverse challenges facing the global economy.

For Germany, the decline in incoming orders is a warning. In order to secure the long-term competitiveness of German industry, targeted measures are necessary. This includes investing in research and development, promoting innovation, reducing bureaucratic hurdles and ensuring a reliable and affordable energy supply. Strengthening domestic demand and diversifying export markets can also help reduce dependence on individual regions.

But the global differences in development also offer opportunities. Companies that react flexibly to changes and open up new markets can benefit from growth regions. International cooperation and open trade are crucial to stabilizing global supply chains and promoting economic growth worldwide. The coming months will show whether the trends observed will solidify or whether there will be a global economic recovery. Close monitoring of economic indicators and forward-looking policies are essential to overcome the challenges and seize the opportunities.

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