Germany industrial orders rebound in September but manufacturing recovery remains fragile

• Germany September industrial orders +4.4% vs +4.8% m/m expected
• Prior -10.6%; revised to -10.1%
• Germany September industrial orders +3.3% y/y
• Prior +3.2% (revised)

The strong rebound in German manufacturing orders in September comes mainly from a notable recovery in the automotive industry. New orders there grew by 10.5% on the month, after new orders and production had been at a low level in the two preceding months due to production changeovers and factory shutdowns. That had been a bit of a drag on the monthly figure as seen with the gnarly estimate in August.

Besides that, the growth in mechanical engineering also had a positive impact on the overall figure in climbing by 8.3% in September. This increase was driven by a major order for the production of internal combustion engines and turbines. However, that is somewhat offset by new orders in other vehicle manufacturing (aircraft, ships, trains, military vehicles), which declined by 10.4% compared to the previous month.

If excluding large orders, new orders in the German industry were 5.1% higher in September than in the month before. In the less volatile three-month comparison, new orders in Q3 2026 were 0.2% higher overall than in Q2 2026; excluding large orders, they rose by 0.1%.

Overall, this signals that the German manufacturing sector is still somewhat holding up despite plenty of headwinds throughout the year so far. But with price pressures ramping up again heading into the final quarter of the year, the outlook will remain challenging especially if businesses and consumers taking a bigger hit amid stronger inflation and rising borrowing costs.