“German Industrial Output Falls in March, Clouding Prospects for Economic Recovery”

08.05.2023

While the production cuts were expected, the cuts were larger than economists had expected. It also clouded expectations of a German economic recovery.

(Deutsche Welle Chinese website) Bad economic data followed: Following news of a fall in exports and fewer orders, German industrial output also suffered its biggest drop in the past year in March. Output in industry, construction and the energy supply sector fell by 3.4% from the previous month, data from the Federal Statistical Office showed on Monday. Analysts had previously forecast a cut in industrial output in March, but expected a reduction of only 1.5%. However, factory output in the first quarter of this year was still up 2.5% from the previous quarter, given the significant gains in January and February.

“This is yet another bad news from German industry. The data released today proves that the risk of a recession has not disappeared,” said Elmar Völker, an economist at the Bavarian State Bank. Economies, Germany narrowly missed recession in first quarter of this year: Germany’s gross domestic product stagnated in the first quarter of this year, following a slowdown last year. If the national economy declines for two consecutive quarters, it is considered to be in recession.

On Monday, the German Ministry of Economic Affairs still made a positive assessment of economic development in the next few months, and relevant experts said: “Business sentiment continues to improve, a sign of further economic recovery this year. “

Jörg Krämer, chief economist at Commerzbank, said: “Unlike most economists, we do not see a recovery in the second half of the year, but a contraction in gross domestic product is more likely. He said interest rates were being raised aggressively in many parts of the world, which would affect demand for products “Made in Germany”.

Automobile manufacturing, machinery manufacturing and high energy consumption industries are all “reducing production”

In March this year, output in the industrial sector fell by 3.3% month-on-month. The German Ministry of Economy stated that the decline in total industrial output was mainly caused by the automobile industry. In March this year, the production volume of the German automobile industry fell by 6.5% month-on-month, while machinery manufacturing fell by 3.4%. The output of high-energy-consuming industries also declined significantly, among which the output of the chemical industry fell by 2.0%.

Commerzbank’s Cramer said: “The decline in industrial production is also an adjustment after a period of rapid growth in the past, such as the automotive industry. However, in terms of trends, production will likely continue to decline in the next few months.”

The construction industry fell 4.6%. High interest rates and rising material prices have crippled the construction industry and a number of construction projects have been halted. Output in the energy supply sector, however, rose 0.8 percent.

Supply shortages are no longer a serious problem

German industry will face a severe test this year. Alexander Krüger, Chief Economist at Hauck Aufhäuser Lampe Private Bank, said: “The general rise in interest levels has put a brake on investment plans.He said that the decline in new business in March this year was comparable to the peak of the new crown epidemic: the number of signings fell by 10.7% compared with the previous month.

The good news for industrial production is that the shortage of raw materials and pre-production products has eased. Complaints from industrial firms about supply bottlenecks fell for the seventh straight month in April. Only about 39% of companies said supply problems persisted, the lowest figure in the past two years.

(DPA, AFP, Reuters)

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