ZVEI – German electrical and digital industry: Noticeably fewer orders in the first quarter of 2024

In March 2024, the German electrical and digital industry again recorded significant losses in incoming orders, with a drop of 17.8 percent. 

“This was actually the biggest drop in orders in almost four years. Domestic demand fell particularly sharply,” said ZVEI chief economist Dr. Andreas Gontermann. 

Domestic orders in March 2024 fell a quarter short of their previous year’s figure (- 25.7 percent). Orders from foreign business partners fell by 11.1 percent. Orders from the eurozone fell by 10.0 percent and those from customers in third countries by 11.6 percent.

In the first quarter of this year as a whole, industry-wide incoming orders fell by 13.5 percent compared to the previous year. Domestic orders fell by 15.2 percent; orders from abroad fell by 12.1 percent. The value of orders from the eurozone was 10.3 percent lower than the previous year between January and March. In the same period, 13.1 percent fewer orders were received from third countries.

Price-adjusted production of electrical and electronic goods in Germany fell short of its previous year’s level by almost a fifth in March 2024 (- 19.1%). “However, this year’s March also had a full three fewer working days than last year. In addition, production had also grown above average a year ago, so that a base effect was added to the working day effect,” says Gontermann. For the first three months of this year taken together, this results in an output decline of 10.8 percent compared to the previous year.

The German electrical and digital industry achieved nominal sales of a total of 19.4 billion euros in March 2024 – 16.6 percent less than in the same month last year. 9.2 billion euros were generated with domestic business partners (- 17.2%) and 10.2 billion euros with foreign partners (- 16.1%). The sales losses in foreign business in March extended to both the eurozone (- 17.4% to €3.6 billion) and third countries (- 15.4% to €6.6 billion).

In the first quarter of 2024 as a whole, aggregated industry sales fell by 8.9 percent year-on-year to €55.3 billion. Revenues from domestic customers fell by 9.6 percent to €26.5 billion between January and March; business with foreign partners fell by 8.3 percent to €28.8 billion. Finally, sales to the eurozone (€10.6 billion) fell 6.7 percent short of the previous year’s figure in the first three months. Business with countries outside the common currency area fell by 9.2 percent to €18.2 billion.

As far as current production constraints are concerned, demand-side obstacles continue to predominate: Half of the electrical companies reported a lack of orders in April. Supply-side bottlenecks such as a lack of labor or skilled workers (in 24% of companies) and a shortage of materials (in 22%) were only mentioned later.

“The business climate in the German electrical and digital industry fell again somewhat in April 2024 after four consecutive increases,” said Gontermann. “Both the assessment of the situation and the general business expectations looking ahead were less favorable than in March. Export expectations, on the other hand, rose noticeably in April, on balance from minus six to plus three percentage points.”