Germany’s Industry Stumbles to Start 2026 as Orders Plunge, Output Drops

Overview

• Factory orders fell 11.1% month on month in January on a seasonally and calendar-adjusted basis, far worse than the 4.5% decline forecast in a Reuters poll.
• Stripping out big-ticket items, orders dipped only 0.4%, following December’s strongest monthly increase in two years.
• Industrial production unexpectedly fell 0.5% in January, defying expectations for a 1.0% rise.
• The decline was led by a 12.4% drop in metal products alongside lower output in pharmaceuticals and in computers, electronics and optics, while energy production jumped 10.3% due to unusually cold weather.
• Analysts remain cautiously optimistic for 2026 on anticipated defense and infrastructure spending, though the Economy Ministry warns the war in Iran poses a significantly higher downside risk, including potential oil price pressures.