Industrial production undershoots expectations in January

Latest reading: Industrial production was down 0.5% in calendar-adjusted month-on-month terms in January, following a 1.0% fall in the previous month. That said, January’s figure came in well below market expectations. Relative to the previous month's data, the reading for energy improved in January (+10.3% in seasonally adjusted month-on-month terms vs -1.8% in December). In contrast, readings worsened for industrial production (-2.4% vs -1.7% in December) and mining and quarrying (-13.8% vs -1.0% in December). Finally, the variation in the construction sector was the same as in the prior month (+2.9% in January and December). On a calendar-adjusted year-on-year basis, industrial production was down 1.2% in January, following a 0.4% increase in the prior month.

Panelist insight: Commenting on the outlook, ING’s Carsten Brzeski stated: “For the time being, we should prepare for a weak first quarter. […] Improving production expectations, the rise in order books since last summer and gradually dropping inventories would all still bode well for German industry – if it wasn’t for a new risk on the horizon. The modestly optimistic outlook for German industry has become more blurred again. The war in the Middle East and, above all, the surge in oil prices could clearly spoil any industrial rebound party in Germany. Even if this is not (yet) 2022, when surging energy prices following fiscal stimulus during the pandemic first fuelled an inflation wave and then a wage-price spiral, the spike in energy prices – if sustained – is a clear stumbling bloc for German industry. Let’s not forget that the so-called energy-intensive industries account for some 17% of industrial gross value added and employ just under one million people.”

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