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Germany's industrial sector reported a surprising downturn in January 2026, with a significant drop in both orders and production, as indicated by the Federal Statistical Office. Orders decreased more than anticipated, while production fell by 0.5% compared to the previous month, contrary to analyst expectations of a 1.0% increase.

Excluding large-scale orders, the decline was limited to 0.4%. Analysts remain optimistic for the year, citing government investments in defense and infrastructure as positive factors, although risks related to the Middle Eastern conflicts could impact growth. The Economy Ministry highlighted an increased risk of industrial slowdown linked to the ongoing war.