Industrial production in Germany fell more than expectations in September

Industrial production in Germany continued its decline, declining 1.4 percent monthly in September, above expectations, due to the decline in the automotive industry.

The German Federal Statistical Office (Destatis) announced provisional data on industrial production for September.

Consequently, seasonally and calendar-adjusted industrial production decreased by 1.4 percent in September compared to the previous month. The market expectation was that industrial production would decline by 0.1 percent. Thus, industrial production continued its decline for the fourth consecutive month.

The decline in industrial production in August, which according to preliminary data had decreased by 0.2 percent monthly, was also revised to 0.1 percent.

The data revealed that industrial production, excluding energy and construction, decreased 1.7 percent in September compared to August.

In this period, the production of intermediate goods decreased by 1.9 percent and the production of capital goods decreased by 0.2 percent. Production of consumer goods also decreased by 4.9 percent.

Destatis stated that industrial production was 2.1 percent lower in the third quarter of 2023 compared to the second quarter.

According to Destatis: “The evolution observed in most industry sectors was negative. “Most of the drop in September was due to the 5 percent drop in the auto industry.” The expression was used.

THE RISK OF RECESSION IS INCREASING

In his assessment of the data, VP Bank chief economist Thomas Gitzel said Germany’s industrial-dominated economy relies on manufacturing to achieve reasonable economic growth rates, but industrial production is weak this year.

Carsten Brzeski, head of global macro research at ING and Germany’s chief economist, also said that data on German industrial production not only triggers a downward revision of economic growth in the third quarter, but also increases the risk of that the country ends 2023 with a technical recession.

Brzeski said: “Although there is no concrete data on the fourth quarter yet, recent events have clearly increased the risk that the German economy will end the year in recession.” he said.

The German economy contracted by 0.1 percent in the third quarter of the year compared to the previous quarter due to weak purchasing power and high interest rates.

On October 11, the government updated its growth expectation, which it had previously announced at 0.4 percent for this year, to -0.4 percent due to the stagnation of the global economy.

The International Monetary Fund also reduced its growth expectation for Germany from -0.3 percent to -0.5 percent, reporting that Germany would be the only developed country to contract this year. (AA)