For the sixth month in a row
Industrial production continues to decline
January 9, 2024, 10:49 a.m
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The order books of German industrial companies are emptying – production will fall again in November. Experts give a gloomy forecast for the new year.
Industrial production continued its decline in November last year. Compared to October, it fell by 0.7 percent – this was the sixth decline in a row, as the Federal Statistical Office announced. For October, the statisticians revised the development slightly upwards, but it remained at a minus of 0.3 percent.
In the less volatile three-month period from September to November, there was a decline of 1.9 percent compared to the previous three-month period. Pure industrial production – excluding the energy and construction sectors – fell by 0.5 percent in November. Energy production increased by 3.9 percent. Construction production fell by 2.9 percent.
“The renewed significant decline in industrial production shows that companies are reacting more and more to the empty order books. The recent global interest rate increases in response to high inflation are taking their toll,” said Commerzbank chief economist Jörg Krämer.
“Meanwhile, the relief from consumption expected by some is not yet in sight, as shown by retail sales that have been weak until recently. All in all, the German economy is likely to have shrunk again somewhat in the fourth quarter,” said Krämer. “We continue to expect a decline of 0.3 percent in 2024.”
“Big plus” for energy-intensive industrial sectors
“In November, production here was almost ten percent lower than at the beginning of 2022, immediately before the Russian invasion of Ukraine,” explained the scientific director of the Institute for Macroeconomics and Economic Research (IMK) of the Hans Böckler Foundation, Sebastian Dullien. “The consequences of the European Central Bank’s interest rate increases, which are increasingly turning out to be excessive, are becoming increasingly apparent here.”
The energy-intensive industries recorded a big increase in production: they increased by 3.1 percent. According to the Federal Ministry of Economics, the production of chemical products in particular increased (5.1 percent). Mineral oil processing, paper production and the glassware industry also increased. In the three-month comparison, however, there was also a decrease of 0.9 percent due to weak previous months.
The prospects also remain poor. “A quick turnaround in the industrial economy cannot be expected given current leading indicators such as incoming orders and business climate,” explained the Ministry of Economic Affairs. “As the year progresses, however, there are likely to be signs of a recovery in industrial production against the backdrop of the expected domestic economic recovery and rising exports,” it said.