Volkswacht Bodensee - 'Sign of life': defence boom lifts German factory orders

New orders increased 5.6 percent month-on-month, according to preliminary figures from statistics agency Destatis, the third straight monthly increase.

Analysts surveyed by the financial data firm FactSet had expected a decline of 1.3 percent.

Russia's invasion of Ukraine has prompted Germany and other European countries to start re-arming, with Chancellor Friedrich Merz vowing to unleash hundreds of billions of euros on defence.

Demand for defence equipment has lifted orders in recent months, the economy ministry noted in a statement.

"The trend of increasing demand from Germany and the eurozone is continuing," it said.

The jump in orders is some positive news for Europe's biggest economy, which is struggling through a long decline due to a manufacturing slump, high energy costs and weak demand in key export markets.

LBBW bank analyst Jens-Oliver Niklasch said the higher orders overall were "a real sign of a possible turnaround in the economy".

He cautioned that higher defence spending "in itself will not generate permanently higher growth potential" but said it was nevertheless important that "there is finally a sign of life from industry".

November's figures were lifted by large-scale orders in the category for transport equipment including military vehicles, aircraft, ships and trains, according to Destatis.

Areas outside defence also contributed, with jumps in demand for electrical and IT equipment as well as machine tools, it said.

Domestic orders jumped 6.5 percent and foreign orders rose almost five percent, with demand from the euro area up more than eight percent.

Despite the rosier picture, the economy ministry noted that orders from some overseas markets had been week since early 2025 due to trade and geopolitical uncertainties, and are expected to remain subdued.

The US tariff blitz has been a heavy blow to German firms as the United States is the country's top export market.

The government is forecasting meagre growth of 0.2 percent for 2025, before the economy is expected to pick up speed this year.

L.Wyss--VB