Industry, after the collapse of 3.5% in August in October, German production rises by more than 2%
There German industrial production And increased by 2.8% in October, after drop of augustor (-3.5%) and September (-0.5%), according to data from the Federal Statistical Office Destatis. Analysts interviewed by Bloomberg they expected a 1.0% increase in October. On an annual basis however, German industry contracted 0.6% after 0.4% in September and remains 6.5% below the pre-pandemic level. The orders to industry fell by 6.9% in October, after having increased by 1.8% in September.
The rebound in industrial production “no surprise” and it constitutes “a ray of hope” without being “a turning point” or “the beginning of a sustainable recovery”, sums up Carsten Brzeski, macroeconomist at ING. Germany has indeed seen a number of red indicators recently, as the country faces a violent fourth wave of the Covid-19 pandemic, persistent shortages of electronics and raw materials, as well as runaway inflation.
The the automotive sector is particularly burdened by the shortage of chips, essential in production, and has been accumulating negative indicators for several months. But in October the sector – the most important in German industry – saw production increase by 12.6% in a month. This figure “means that industrial production in general could increase in the fourth quarter”, generating “a positive contribution” to the evolution of GDP, observes Andrew Kenningham, of Capital economics.
“However, it appears that any improvement in manufacturing output will be more than offset by the weakness of the tertiary sector“, struck by the new health restrictions, added the expert. The Bundesbank expects zero growth in the fourth quarter, after + 1.7% in the July-September period, while the German government expects GDP growth of 2.6 % for the year.
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