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October saw new orders for German-made industrial goods fall unexpectedly, as provisional data released Wednesday from the nation’s statistics office, Destatis, showed the sector being weighed down by weak global demand, combined with high costs due to the energy crisis.

Factory orders from manufacturers fell 7.3% year over year, and 3.7% monthly, defying the predictions of analysts of a 0.2% reduction month over month.

The machinery and equipment sector received the majority of the blame for the slump from Destatis, as new orders there declined by 13.5% from September, which had seen a 9.8% rise in new orders.

Demand also declined in other sectors, where fabricated metal products (except machinery and equipment), basic metals manufacturing, electrical equipment, and automotive parts, all saw demand decline, according to the data.

Foreign orders were down 7.6% month over month, as domestic orders were up by 2.4%.

Other sectors saw new orders increase, such as aircraft, ship, and train equipment manufacturers, where new orders were up 20.2%. Consumer goods increased 2.8%.

In July-September, Germany’s industrial output shrank 0.1%, as economists are predicting there will be another contraction in the present quarter, which would indicate Europe’s industrial powerhouse is on course for a recession.

Commerzbank economist Ralph Solveen said to Reuters, “So far, many companies have compensated for the lower order intake by working off their order backlogs.”

He added, “In the long term, however, they will not be able to avoid reducing their production, which suggests that the German economy will continue to shrink in the winter months.”

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