German Industry Orders Surge in Early 2026, Led by Electrical and Machinery Sectors

In a significant economic turnaround, German industry recorded its biggest order volume increase in two years as of December 2025, with orders rising sharply for the fourth consecutive month. Data from the Federal Statistical Office and industry reports indicate a 7.8% overall increase in industrial orders from the previous month, far exceeding analysts' expectations of a 2.2% decline. This surge signals renewed dynamism in the German industrial sector.

The growth was driven largely by substantial increases in the manufacturing of electrical equipment, which rose by 9.8%, and production of data processing devices along with electronic and optical products, which grew by 5.7%. Additionally, metal products and machinery sectors also experienced marked increases in orders, reinforcing a broad-based industrial upswing. However, not all areas shared in this growth. The automotive sector saw a decline in orders by 6.3%, consistent across sources. More notably, the wider vehicle manufacturing segment—including aircraft, ships, trains, and military vehicles—recorded a sharp 18.7% drop against an already high prior month level.

Experts attribute the strong overall order inflow in part to increased government spending, especially on defense-related equipment, which contributed significantly to the large orders underpinning this growth. Thomas Gitzel, chief economist at VP Bank, characterized the increased orders as turning hopes for an economic rebound into tangible developments, signaling that industrial activity is poised to accelerate in coming months. Sebastian Dullien, director at the Institute for Macroeconomics and Economic Research, described the December order surge as a "dramatic order boost," with levels not seen since early 2022.

Supporting these industrial trends, the federal government's annual economic report projects a 1% growth in Germany's gross domestic product for 2026, partly fueled by rising public expenditures. This mix of robust order growth in key manufacturing segments alongside declines in automotive and broader vehicle production reflects both challenges and opportunities as the German economy embarks on renewed growth trajectories in the opening months of 2026.