Germany: Industrial production falls again in December
Industrial output contracted 0.4% over the previous month in December. While this constitutes a less severe drop than November’s revised 1.3% decrease (previously reported: -1.9% month-on-month), it marked the fourth consecutive monthly fall in production and sharply contrasted market expectations of a rebound at the end of the year. The drop in output in December came on the tails of contractions in the production of intermediate goods and consumers goods. More positively, output of capital goods increased.
Compared to the same month a year earlier, industrial production shrank 3.9% in December. This was, however, slightly up from November’s revised 4.0% contraction (previously reported: -4.7% year-on-year). Lastly, annual average growth in industrial production eased from 1.9% in November to 1.0% in December.
Momentum in Germany’s industrial sector moderated markedly in 2018, with output growing just 1.0% over 2017 when industrial production expanded at a multi-year high of 3.3%. The slowdown is indicative of the wider economic moderation in Germany and across the globe, as well as troubles in the automotive sector in the second half of the year stemming from new emission regulations. Despite the bleak data, Carsten Brzeski, chief Germany economist at ING, expects “the bottleneck in the German automotive industry to be resolved in the coming months”. Expanding upon this point, Brzeski noted that “the sharp increase in new orders from other eurozone countries […] shows that not everything is so depressing for German industry”.