Brandenburg Gate in Berlin, Germany

Germany Industry April 2020

Germany: Industrial production contracts at sharpest pace on record in April

Industrial output slid 17.9% on a calendar-adjusted month-on-month basis in April (March: -8.9% mom). April’s figure marked the steepest contraction on record.

The reading was largely due to a dive in intermediate, consumer and capital goods output. Looking at sectors, production in the automotive industry collapsed at a particularly steep pace. Construction sector production fell, while energy output declined at a softer rate than in March.

On a year-on-year basis, factory output fell at a more pronounced rate of 25.3% in April (March: -11.3%). The reading marked the worst result on record. Accordingly, the trend pointed down, with the annual average variation of industrial production coming in at minus 6.0%, down from March’s minus 4.1%.

The reading was heavily influenced by the government-imposed restrictive measures to curb the spread of Covid-19. Going forward, the slump in the industrial sector should ease somewhat given the gradual lifting of lockdown measures at home and abroad; however, foreign demand is likely to remain weak, and it will take some time before the sector fully recovers.

Commenting on the data, Carsten Brzeski, chief Eurozone economist at ING, stated: “Two months of Covid-19 have already left a more adverse impact than the entire financial crisis [and the] data also illustrates how an open economy like Germany has been hit severely by the lockdown measures both at home and abroad.”

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