Global industrial production: Order intake in the manufacturing sector – Germany in international comparison

German economy under pressure – How other industrialized nations are holding their own

New orders in the manufacturing sector are a key indicator of a country's economic performance. They reflect both future production activity and companies' willingness to invest. Germany, as one of the leading industrial nations, is under particular scrutiny in this regard. In November 2024, new orders in the German manufacturing sector recorded a significant decline of 5.4% compared to the previous month and 1.7% compared to the previous year. A decline of 1.5% had already been observed in October. These figures point to a continuing economic slowdown.

To better understand Germany's performance, an international comparison is crucial. How are other major economies such as the USA, China, Japan, South Korea, and Singapore faring? Which countries are demonstrating resilience or even growth while Germany is struggling? This analysis examines the developments, challenges, and opportunities in these countries.

Developments in the USA

The US economy presented a mixed picture in the fall of 2024. While manufacturing orders rose by 0.5% in October, they fell by 0.4% in November. A year-on-year decline of 0.4% was also recorded. These fluctuations reflect the uncertainties currently weighing on the US economy.

The presidential election in November 2024 played a significant role, creating uncertainty and discouraging companies from investing. Additional external factors, such as the Boeing machinists' strike in October, disrupted supply chains. The Federal Reserve's monetary tightening, 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's manufacturing sector showed positive momentum in autumn 2024. The Purchasing Managers' Index (PMI) rose to 50.3 in November, signaling expansion. The new orders index, in particular, which climbed to 50.8, indicates a recovery in demand.

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

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

Developments in Japan

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

Nevertheless, there were bright spots: Some industries, such as pulp, paper, power generation, and ferrous and non-ferrous metals, recorded significant growth. The power generation sector, in particular, saw a strong increase of 116% in October. This development demonstrates that, despite challenges, Japan's economy possesses flexible and competitive sectors.

However, Japan continues to face structural challenges, such as an aging population and stagnant domestic demand. The government is therefore focusing on increased automation and digitalization to safeguard its 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 a slight expansion. However, the weak global economy and subdued demand from key export markets such as the US, Europe, and China continued to weigh on South Korean industry.

Despite these challenges, South Korea succeeded in securing significant international contracts. Orders for plant engineering projects abroad increased by 12.7% in 2024 to US$34 billion. These successes underscore South Korea's innovative strength and strong position in specialized sectors such as shipbuilding and electronics.

Developments in Singapore

Singapore experienced robust growth in its manufacturing sector in autumn 2024. The Purchasing Managers' Index (PMI) rose to 51.0 in November, marking its 15th consecutive month of expansion. The electronics industry, which accounts for a third of industrial activity, contributed significantly to this positive development, rising to 51.6.

However, challenges exist here as well. Supply delays and a continuing decline in manufacturing employment 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® remained 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 considerable. While countries like Ireland and the Netherlands fared relatively well, states heavily dependent on energy imports, such as Germany and Italy, struggled particularly.

Comparison of developments

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• The HCOB PMI® (Purchasing Managers' Index®) is an important economic indicator developed by Hamburg Commercial Bank and S&P Global
• Which indicator shows us the state of 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 economic situation: The world economy is in a phase of cooling, which is particularly burdensome for export-oriented countries such as Germany.
• Trade policy: Geopolitical uncertainties and trade conflicts, especially between the US and China, are having a negative impact on international trade.
• Monetary policy: The increase in key interest rates in the US 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 German manufacturing sector is a serious signal. While global uncertainties are weighing on the entire world economy, international comparisons show that countries with strong domestic demand, innovative capacity, and targeted government support are more resilient.

Germany must act strategically to secure its competitiveness. Investments in education, research, and digitalization, the promotion of innovation, and the diversification of export markets are crucial measures. Only in this way can German industry meet the challenges of the future and secure long-term growth and prosperity.

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A nuanced picture of global industrial production

Global industrial production in the final months of 2024 presented a complex picture, characterized by differing dynamics across economies. A detailed examination of manufacturing orders, a key leading indicator of economic development, reveals a nuanced picture. While some economies experienced robust expansion, others struggled with declining demand and economic slowdown. The following analysis examines developments in selected countries and regions and seeks to understand the underlying causes of these divergences.

Germany: Signs of an economic slowdown are intensifying

Developments in Germany are cause for concern. New orders in the manufacturing sector declined significantly 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 even more pronounced at 5.4 percent. Comparing November 2024 with the same month of the previous year, the decrease was 1.7 percent. These figures clearly signal a slowdown in Germany's industrial sector, which has traditionally been a mainstay of the German economy. Experts see this development as confirmation of the cooling economy, which is influenced by a multitude of factors. These include, among others, persistent inflation, rising energy prices, and uncertainties in global trade.

USA: A mixed picture amid economic volatility

The picture in the United States is also mixed, although the fluctuations are less pronounced than in Germany. Following a slight increase in orders in October of 0.5 percent compared to the previous month, November saw a slight decline of 0.4 percent. Compared to the previous year, this also represents a decrease of 0.4 percent. These figures indicate a degree of volatility in American industry. It is assumed that the uncertainties surrounding the presidential election led many companies to adopt a wait-and-see approach, resulting in more cautious investment. In addition, specific events such as the Boeing strike in October weighed on some sectors, while the Federal Reserve's restrictive monetary policy tended to dampen investment activity.

China: Continuous growth thanks to strong domestic demand

In contrast to the rather subdued developments in Europe and the US, China is showing robust momentum in its manufacturing sector. The Purchasing Managers' Index (PMI) remained 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 in the sector. Particularly noteworthy is China's strong domestic demand, which represents an important stabilizing factor. Furthermore, Chinese industry is benefiting from targeted government support measures and investments in key sectors. The focus on technological innovation and the development of new markets also contributes to this positive picture.

Japan: Between global uncertainties and sectoral differences

Japan's industrial production showed an uneven trend during the period under review. While orders in the machinery industry reached 122.5 billion JPY in October, they fell to 119.3 billion JPY in November. These fluctuations reflect the uncertainties in the global economy, which are also significantly impacting Japan. Demand for Japanese products is influenced by economic developments in key export markets. At the same time, there are considerable differences within the Japanese industrial sector. Some industries, such as the electronics industry, are under pressure, while others, such as the energy sector, could benefit from rising prices.

South Korea: Gentle recovery after difficult months

South Korea's manufacturing sector showed signs of a slight recovery in November 2024. The Purchasing Managers' Index (PMI) rose from 48.3 in October to 50.6 in November, crossing the growth threshold. This suggests stabilization and potentially the beginning of an upward trend after several months of declining orders. The South Korean economy is heavily export-oriented and therefore vulnerable to fluctuations in global demand. The recovery could be attributed to a slight increase in demand in key export markets. 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 growth story in the manufacturing sector. The Purchasing Managers' Index (PMI) remained firmly in expansionary territory in both October (50.8) and November (51.0). This underscores the resilience and competitiveness of Singapore's industrial sector, which is heavily focused on high-tech manufacturing and services. Singapore benefits from its strategic location as a trading hub in Southeast Asia and from an investment-friendly climate. The focus on future-oriented industries such as the semiconductor sector is a key contributor to this success.

European Union: Persistent weakness in the industrial sector

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

Reasons for the different developments: A complex interplay of factors

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

Global economic situation

The overall state of the global economy plays a crucial role. A global economic slowdown, such as the one currently being observed, tends to have a negative impact on industrialized nations, particularly export-oriented countries like Germany. Conversely, periods of global expansion can stimulate demand and boost production.

Trade policy and international relations

Trade conflicts, tariffs, and other protectionist measures can negatively impact international trade and disrupt supply chains. Geopolitical tensions and wars create uncertainty and can dampen companies' willingness to invest. A stable and rules-based international trading system is crucial 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 dampening 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 divergent developments.

Structural factors

A country's economic structure, the composition of its industries, and its capacity for innovation play a crucial role. Countries with a diversified industrial structure and a high proportion of future-oriented sectors tend to be more resilient to economic fluctuations. The degree of digitalization and automation in 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. The COVID-19 pandemic, for example, led to massive production losses and supply chain problems. The war in Ukraine and the associated energy crisis also severely impacted European industry.

Challenges and opportunities in a changing global economy

The analysis of new orders in the manufacturing sector 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, especially in Europe, are struggling with economic weakness and the consequences of global crises. These differing developments highlight the diverse challenges facing the global economy.

For Germany, the decline in orders serves as a warning. Targeted measures are needed to secure the long-term competitiveness of German industry. These include investments in research and development, the promotion of innovation, the reduction of bureaucratic hurdles, and ensuring a reliable and affordable energy supply. Strengthening domestic demand and diversifying export markets can also help to reduce dependence on individual regions.

Global differences in development also present opportunities. Companies that react flexibly to changes and tap into new markets can benefit from growth regions. International cooperation and open trade are crucial for stabilizing global supply chains and promoting economic growth worldwide. The coming months will show whether the observed trends solidify or whether a global economic recovery occurs. Close monitoring of economic indicators and proactive policymaking are essential to overcome the challenges and seize the opportunities.

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