Germany: Industrial production data disappoints again, signaling a weak start to Q2
June 8, 2018
Industrial production got off to a weak start to the second quarter, continuing the trend of disappointing data coming out of Europe’s biggest economy in recent months. In April, industrial output contracted 1.0% over the prior month in seasonally- and working-day adjusted terms, strongly down from the revised 1.7% expansion logged in March (previously reported: +1.0% month-on-month). The April result, which was in stark contrast to market expectations of a timid 0.3% expansion, is starting to raise questions over the impact of supply-side constraints, as unemployment is at a record-low level, and ongoing geopolitical tensions, most notably with the United States. However, officials are pointing fingers at weak domestic and European demand.
A strong performance in the construction sector, coupled with a rebound in the mining sector, were offset by strong downturns in the manufacturing and energy sectors. Activity in the construction sector expanded a stout 3.3% in April, which was more than double the prior month’s result (March: 1.5% mom), while mining output rebounded to 0.9% growth (March: -1.4% mom). However, activity in the manufacturing sector swung from a 1.6% expansion in March to a 1.7% contraction in April. The same trend was witnessed in the energy sector, where output dropped 1.9% month-on-month compared to a 3.4% expansion in the prior month.
On an annual basis, industrial production expanded 2.0%, which was down from the revised 3.8% increase in March (previously reported: +3.2% year-on-year). Lastly, annual average growth in industrial production came down from the prior month’s revised six-year high of 4.1% (previously reported: +4.0%) to 4.0% in April.
Germany Industrial Production Forecast
Panelists polled by FocusEconomics expect industrial production to expand 2.9% in 2018, which is unchanged from last month’s forecast. For 2019, the panel sees industrial production increasing 2.3%.
Author: Jan Lammersen, Economist