Germany: German industrial sector not out of the woods yet
Industrial production fell 1.9% month-in-month in April in seasonally- and calendar-adjusted terms, swinging from March’s 0.5% increase. April’s drop came on the back of broad-based contractions in output of consumer, capital and intermediate goods. On a sector level, production in the energy sector was also down noticeably; the construction sector, however, provided a small silver lining as production increased marginally.
Compared to April 2018, output dropped 1.8%, down from March’s 0.9% contraction. Lastly, annual average industrial production decreased 0.5% in April, down from the 0.2% drop in March.
Commenting on the data release, Carsten Brzeski, stated that “this is a horrible start to the second quarter for German industry [but] the past has often shown that a single month is clearly not a good illustration of German industry or the entire economy.” At the same time, however, Brzeski argued that the latest data justifies “the European Central Bank’s new dovishness. It now needs even stronger domestic demand and a bounceback in May and June to avoid a return to recessionary territory.”