German factory orders drop as Iran war casts shadow
German factory orders fell faster than expected in April, official data showed today, with little hope for a revival as the Iran war weighs on the economy.
New orders, a key indicator of future business activity, dropped 3.8% from a month earlier, according to preliminary figures from statistics agency Destatis.
A decline had been expected after a strong rise in March, when companies rushed to stock up amid supply chain problems caused by the Middle East conflict.
But the pullback was still bigger than the 3% drop forecast by analysts surveyed by the financial data firm FactSet.
"There have been increasing signs that rising prices for energy and raw materials, together with significantly heightened geopolitical uncertainty, are resulting in weaker demand," the economy ministry said in a statement.
"Against the backdrop of higher costs and uncertainty, as well as growing supply chain bottlenecks, industrial activity is likely to remain subdued in the coming months," it warned.
April's orders were dragged down by a fall of over 5% in the auto industry, as well as hefty drops in the manufacturing of electrical equipment and machinery, Destatis said.
Foreign orders fell over 4% and domestic orders were down almost 3%.
Hopes had been high for a strong rebound in the eurozone's manufacturing powerhouse this year on the back of a public spending blitz by Chancellor Friedrich Merz.
But the energy shock and supply chain disruptions triggered by the US-Israeli war on Iran is taking a toll, particularly on power-hungry manufacturers.
In April, the German government halved its 2026 growth forecast due to the conflict, and now expects GDP to expand by just 0.5%.
