Germany: Industrial output drops in December
Industrial output fell 0.3% month-on-month in December on seasonally- and calendar-adjusted terms, swinging from the 0.3% increase recorded in the prior month. The print came on the back of a drop in consumer goods production, and contractions in energy and construction output.
On an annual basis, industrial output fell 4.1% in December, down from the 2.2% decrease recorded in November. Annual average output rose to 3.8% in December (2020: -8.2% year-on-year), up from November’s 3.5%.
Contrasting the headline reading, manufacturing production rose strongly and additional data bodes well, with Dr. Ralph Solveen, senior economist at Commerzbank, commenting:
“The manufacturing sector recorded a significant increase of 1.2% […]. his was again driven primarily by the automotive industry [and] the figures already published by the German Association of the Automotive Industry (VDA) on car production in January suggest that auto production again increased noticeably in January. […] So, at least for January, the chances of a further increase in industrial production are good. However, there is unlikely to be any upward momentum until the problems in the supply chains have been largely overcome, which is not expected for several months. Then, however, production should pick up significantly.”
Carsten Brzeski, global head of marco at ING, added:
“Remember the glass ketchup bottle that you shake and tap all you want with no result until suddenly it all comes flooding out and your food is smothered in ketchup? Under the surface of today’s headline data, the bottle has started to drip.”