“bottomed out”
Industry produces less for the fourth month in a row
October 9, 2023, 11:17 a.m
While the construction industry continues to struggle with high interest rates, the automotive industry can report increased production figures. Overall, however, industrial production is shrinking again. Nevertheless, some voices believe that the bottom has been reached and are hoping for stabilization or even momentum.
German companies reduced their production in August for the fourth month in a row: industry, construction and energy suppliers together produced 0.2 percent less than in the previous month, as the Federal Statistical Office announced. In a three-month comparison, which is less prone to fluctuations, industrial production from June to August 2023 was 1.9 percent lower than in the previous three months, as the statisticians explained.
The development was different in the different sectors. In the auto industry, where production had fallen sharply in June and July, it grew significantly again in August. Production also increased in the areas of furniture and textiles. In August, however, there were above-average declines in production in the construction industry, energy production and important mechanical engineering. The construction industry is struggling with rising interest costs, which is why many potential customers are hesitant about new projects.
The Federal Ministry of Economics explained that the recent increase in order numbers indicates “that industrial production may have bottomed out and will pick up speed again towards the turn of the year.” Various economists see it similarly: “At least it looks like there is some stabilization at a low level, no longer a crash,” said LBBW economist Jens-Oliver Niklasch.
“The economic situation remains difficult”
Nevertheless, the renewed minus suggests that the German economy shrank in the last third quarter. “The decline in gross domestic product will not be particularly large, but this shows once again that the German economy is currently not getting anywhere,” said VP Bank chief economist Thomas Gitzel. Above all, a better global economic environment is needed for things to improve. However, this is not expected until 2024, when Germany’s largest export customer, the USA, is expected to pick up speed again.
New business has recently picked up noticeably for industry as a whole: from June to August, industrial orders increased by 4.9 percent compared to the previous three months. However, “it is not yet possible to derive an imminent turnaround in industrial production from this,” said Commerzbank chief economist Jörg Krämer. This is supported by the fact that, according to surveys, companies have now processed the orders that were left behind during Corona. “The economic situation will remain difficult for the time being,” concluded Commerzbank’s chief economist.