Germany: Industrial activity rebounds sharply in August
Latest reading: Industrial output rebounded 2.9% in seasonally adjusted month-on-month terms in August, which contrasted July’s 2.9% decline and smashed market expectations. August’s result marked the strongest increase since October 2021. Looking at the details of the release, August’s reading reflected a sharp recovery in manufacturing sector output and energy supply. Construction activity also returned to growth in the month. That said, mining and quarrying lost steam.
On an annual basis, industrial output fell at a softer 2.7% in August compared to July’s 5.6% decline. Meanwhile, the trend pointed down, with the annual average variation of industrial production coming in at minus 4.6% in August, down from July’s minus 4.5% reading.
Panelist insight: ING’s Carsten Brzeski commented:
“Today’s increase is not an indication of a recovery; it’s more of a technical rebound following July’s sharp decline, highlighting that the economy is still stuck in stagnation. Based on the hard data available for the first two months of the third quarter, the risk of yet another negative quarter remains high. German industry has been the best example of the entire economy’s problems over the last few years: stuck between cyclical and structural headwinds and finally realising that the old macro business model of cheap energy and easily accessible large export markets is no longer working.”