Industrial orders in Germany rose in July to their highest level since December 2025, according to official data released on Friday by Destatis, Germany’s federal statistical office. The increase was 2.5% compared to the previous month, after adjusting for seasonal and calendar variations. This outperformed expectations, as analysts had predicted only a modest rise of 0.5%. However, the growth rate was slightly lower than the 3.1% increase recorded in May. The rise in orders is largely attributed to a strong increase in domestic demand, which has grown by 9.1% since May. This surge is partly driven by public sector spending, particularly on modernizing the Bundeswehr (Germany’s armed forces) and infrastructure projects aimed at achieving climate neutrality. In 2025, the German government approved a major fund of several hundred billion euros to invest in defense and infrastructure, which has contributed to the recent uptick in industrial activity. When excluding large orders, industrial orders in Germany fell by 1.4% compared to the previous month, according to Destatis. However, Jens-Oliver Niklasch of LBBW noted that large orders continue to play a significant role in driving new business. Sectors like shipbuilding, rail, and aerospace saw a remarkable increase of 126.4% in monthly orders, which he described as "exceptional." These industries are benefiting from major projects and long-term contracts. In contrast, other sectors such as the automobile industry, which has been struggling with economic and supply chain challenges, saw a decline of 12.5% in orders. Looking at the quarterly comparison, overall industrial orders increased by 2.2% compared to the previous three months. However, when excluding large orders, the quarterly growth rate was flat, showing a 2.2% decrease. This highlights the uneven nature of the recovery across different industries.