Industrial output returns to the doldrums in April

Latest reading: Industrial production decreased 1.4% on a seasonally and calendar-adjusted month-on-month basis in April. The reading was a deterioration from March’s downwardly revised 2.3% expansion, was steeper than markets had expected and marked the joint-worst reading since July 2024. Looking at the details of the release, the downturn was broad-based, likely due to the fallout from U.S. tariffs as well as some Easter-related effects: Manufacturing plus mining and quarrying swung into contraction, and energy supply shrank at a sharper pace. More positively, the construction sector gained steam. On an annual basis, industrial output fell at a more pronounced rate of 1.8% in April (March: -0.7% yoy). Meanwhile, the trend improved slightly, with the annual average variation of industrial production coming in at a one-year high of minus 3.5%, up from March's minus 3.7%.

Panelist insight: ING’s Carsten Brzeski commented: “Today’s industrial production data reflects the feared reversal of the frontloading effect of the first quarter and suggests that the structural weakness in industry is not over, yet. At the same time, however, there are growing indications that the German industrial cycle is gradually turning, as industrial orders have also improved and inventory levels have started to fall. However, […] the ongoing trade tensions will still weigh on German (and European) industry.”

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