Germany – Weak start to Q3

Industrial production fell by 2.4% in July compared to the previous month.

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Dr. Ralph Solveen

Commerzbank Economic Research

September 6 2024

Even if this significant drop is probably partly due to the timing of the summer vacations, it means a weak start to the third quarter for the industrial sector. As the recent weakening of sentiment indicators suggests that there will be no rapid turnaround for the better, there is a growing risk that the German economy will continue to contract slightly in the third quarter, even though goods exports rose by 1.7%, which was slightly better than expected.

After the at least halfway positive order figures reported yesterday, there is more bad news from German industry today: industrial production fell by 2.4% in July compared to the previous month. In manufacturing the drop was even greater at 3.2%.

A look at the individual sectors shows that production in the automotive sector fell particularly sharply (-8.1%). However, this figure is likely to have been influenced by the timing of the summer vacations. The production figures already available for August indicate a significant increase in production again. This effect may also have played a role in the other sectors. However, it is doubtful that it can explain the overall decline in production. Production in the energy-intensive sectors also fell again in July by just under 2%. While this points to a stabilization, there has so far been no sign of a recovery triggered by the lower energy prices.

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