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Germany Industrial production JulyAugust 2021

Germany: Industrial output tumbles in August on supply-side constraints

Industrial production dropped 4.0% over the prior month in August in seasonally- and calendar-adjusted terms, swinging from July’s 1.3% expansion. The print marked the steepest fall in output since April last year when activity was weighed on by the first lockdown. August’s contraction reflected falling output of intermediate, consumer, and capital goods, while activity in the construction sector also declined. Energy output, on the other hand, rose.

On an annual basis, industrial production expanded 1.7% in August (July: +6.0% yoy). Annual average industrial production rose from 2.5% in July to 3.4% in August.

Carsten Brzeski, global head of macro at ING, added:

“Instead of the hoped-for rebound, disappointing industrial production in August suggests that the traditional growth engine of the German economy will again be a drag on growth in the third quarter. […] The fact that, despite filled order books and low inventories, German industry has been a drag and not a driver of economic growth shows the downside of international production processes. Supply chain frictions have completely undermined strong fundamentals. At some point in time the high backlog will have to be reduced and should lead to a surge in industrial activity again. It currently looks as if this moment will come rather later than sooner.”

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