According to a ZVEI press release, incoming orders in the German electrical and digital industry in December 2023 were 5.3% below the previous year's level. Dr Andreas Gontermann, Chief Economist of the ZVEI, commented: "Looking back, the industry therefore recorded a total of nine months of declining orders last year," said ZVEI Chief Economist Dr Andreas Gontermann.
Fewer domestic orders in December
With a drop of 8.8%, domestic orders in December fell much more sharply than orders from foreign customers (- 2.1%). While 7.1% fewer new orders were received from the eurozone, there was a slight increase of 1.2% in orders from third countries thanks to large orders.
In 2023 as a whole, incoming orders fell 2.2% short of the previous year's figure. This contrasted with growth of 2.6% in domestic orders and a decline of 6.1% in foreign orders. At 9.3%, the decline in new orders from the eurozone in 2023 was more than double that of orders from countries outside the single currency area (- 4.2%).
The price-adjusted production of electrical and electronic goods in Germany fell short of the previous year's level in December 2023 by a tenth (- 10.2 %).
"This setback at the end of the year also pushed the growth rate for last year as a whole noticeably down again," said Gontermann. "As a result, aggregate sector output in 2023 ultimately only increased by half a per cent."
Sharp drop in sales at the end of 2023
Nominal revenue in the domestic electrical and digital industry totalled €19.2 billion in December 2023, down 7.9% on the previous year.
Business with both domestic and foreign customers fell in December, the former by 10.1% (to €9.2 billion) and the latter by 5.8% (to €10.0 billion). Sales with customers from the eurozone fell by 6.4% to €3.3 billion and sales with countries outside the common currency area by 5.5% to €6.7 billion.
Annual sales grow despite weak phase
Nevertheless, the industry closed 2023 as a whole (according to preliminary calculations) with aggregated revenue of 238.1 billion euros - an increase of 6.0%.
Domestic and foreign sales totalled 115.0 billion euros (+7.2%) and 123.1 billion euros (+5.1%) respectively last year. Revenue with business partners from the eurozone increased by 5.8% to 44.0 billion euros in 2023, while revenue with third countries rose by 4.7% to 79.1 billion euros.
Capacity utilisation across the sector fell further at the start of this year. Compared to the situation three months earlier, it fell by almost one and a half percentage points to 80.5% of normal full capacity utilisation. At the same time, the order backlog fell from 4.8 to 4.1 production months.
With regard to current production constraints, there has recently been relief on both the supply and demand side (compared to the beginning of the fourth quarter of 2023): 43% of companies still reported a lack of orders, 29% a lack of labour or skilled workers and 21% a shortage of materials.
Following the initial recovery in December, the business climate in the German electrical and digital industry also improved in January 2024.
"Although the current situation was still assessed in the same way as in the previous month, general business expectations climbed significantly," says Gontermann. "Export expectations also increased in January, turning slightly positive again for the first time in six months."
Further information is available at www.zvei.org.