Industrial output grows at the fastest rate in nearly four years March

Latest reading: In March, industrial output extended a cycle of swinging in and out of contraction that started in early 2024, expanding 3.0% in seasonally and calendar-adjusted month-on-month terms in March (February: -1.3% mom s.a.). The print marked the best reading since October 2021 and smashed market expectations. Looking at the details of the release, manufacturing and construction rebounded sharply, and energy output fell at a softer pace, outpacing softer momentum in mining and quarrying. On an annual basis, factory output fell at a softer pace of 0.2% in March (February: -4.1% yoy), the best result since May 2023. Accordingly, the trend improved, with the annual average variation of industrial production coming in at minus 3.6%, up from February's minus 4.0%.

Panelist insight: ING’s Casten Brzeski commented: “While industrial production is still some 9% below its pre-pandemic level, recent months have shown clear signs of bottoming out. A trend that, despite US tariffs, could continue in the first months of the second quarter, as industrial orders have also improved and inventory levels have started to come down. However, while these are clear ingredients for a typical cyclical rebound, the imposed tariffs of 10% on European goods as well as higher tariffs on automotives will still weigh on German (and European) industry. By how much will become clear over the next few months. In this regard, the stronger euro exchange rate is like an additional tariff on top of the official tariffs.”

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