Industrial production makes up lost ground
Dr. Nils Jannsen, Head of German Economic Outlook at the Kiel Institute, comments on the latest figures released by the Federal Statistical Office showing that industrial production (excluding energy and construction) increased by 1.7 percent in September:
"Industrial production made up considerable ground in September. A sharp increase in output had been expected, as plant retooling and summer factory shutdowns had temporarily weighed heavily on automotive production in July and August. As a result, production has made up for the dip recorded in the preceding months. Overall, however, industrial production remains at a low level.
Prospects for industrial production to return to a moderate upward trend have improved recently. The business climate in manufacturing has brightened considerably. Recent figures for new orders also provide positive signals. However, leading indicators do not yet point to strong momentum. The improvement in business sentiment has come from a low base, and firms are not yet particularly optimistic about the outlook. The upward trend in new orders is gaining traction, although new orders continue to fluctuate considerably from month to month.
Production trends have differed across manufacturing industries for some time. While some industries are expanding their output, there are still no signs of a sustained recovery in major industries such as machinery and automotive manufacturing. Developments have been more favorable, particularly in industries likely to benefit from the global AI boom and rising defense spending. Persistent competitiveness problems, however, continue to stand in the way of a broad-based recovery in manufacturing."
