Germany’s Federal Statistical Office (Destatis) has announced provisional data on industrial production for March.
Accordingly, seasonal and calendar adjusted industrial production decreased by 3.4 percent in March compared to the previous month. The expectations for industrial production in the markets were for a decrease of 1.3 percent.
The decline in industrial production in March came after factory orders announced last week slumped 10.7 percent in March, the biggest monthly drop since the COVID-19 outbreak peaked in April 2020, amid a weakening global economy.
As hopes rise that the German economy can survive a recession, the latest negative data has accelerated recession concerns in Europe’s largest economy.
February industrial production data, which was announced as a monthly increase of 2 percent, was also revised as a 2.1 percent increase.
The data revealed that industrial production, excluding energy and construction, decreased by 3.3 percent in March compared to February.
In the said period, intermediate goods production decreased by 4.4 percent and consumer goods production decreased by 0.1 percent. Apart from industry, an increase of 0.8 percent was observed in energy production, while a decrease of 4.6 percent was recorded in construction.
It was noteworthy that there was a sharp decrease of 6.5 percent in the production of the automotive industry, which is expressed as the cornerstone of the German industry with its brands such as Volkswagen, BMW and Mercedes.
“The automotive industry has had a particularly large impact on the decline in industrial production in March,” Destatis said in a statement. it was said. In March, mechanical engineers produced 3.4 percent less.
In the statement of Destatis, it was stated that the production in energy-intensive industries decreased by 3.3 percent in March compared to February, and it was announced that the industrial production in the country increased by 2.5 percent compared to the previous quarter due to the strong growth in January and February in the first quarter.
In the statement made by the German Ministry of Economy and Energy, it was stated that after the production in the German industry increased strongly at the beginning of the year, there was an unexpected sharp decrease in March. “In the first quarter, there was an increase of 1.8 percent compared to the previous quarter. increased even more. This sheds light on an economic recovery in the coming months of the year.” it was said.
‘The danger of recession continues’
ING Germany Chief Economist Carsten Brzeski, in his assessment on the subject, stated that the March industrial production data showed that a “Renaissance” in the industry is far from reality, “The chance of a downward revision to the GDP growth in the first quarter is still high. shows that it has been pushed into technical recession.” used the phrases.
Emphasizing that “industrial production data was not the only thing that disappointed” about the German economy in March, Brzeski said, “In fact, all macro data on the German economy fell in March. Sharp declines in retail sales and exports, together with today’s industrial production data, give the chance of a downward revision of the first quarter GDP growth. A downward revision would mean the economy eventually fell into recession.” made its assessment.
Elmar Völker, economist of the German Landesbank Baden-Württemberg (LBBW) Bank, said: “Another bad news from the German industry. The figures underline that the danger of recession in the economy has not been averted in any way.” said.
Hauck Aufhauser Lampe Privatbank Chief Economist Alexander Krüger pointed out that the general increase in interest rates after high inflation may slow down the investment plans of companies.
Destatis will release its final first quarter GDP data on May 25.
Recession narrowly escaped in the first quarter
Meanwhile, the German economy was unable to grow in the first quarter of this year, as the unusually high inflation and rising interest rates suppressed consumer spending.
Thus, after zero growth in the first quarter, the German economy did not “closely” enter the technical recession, which is expressed as “a contraction in GDP for two consecutive quarters”. The German economy shrank 0.5 percent in the last quarter of last year.
Although the bottlenecks that emerged during the COVID-19 epidemic eased, the German economy is adversely affected by the stagnation in demand as a result of the rise in interest rates, the decrease in confidence in the economy and the decrease in the purchasing power of consumers in an unusually high inflation environment.
The German government expects 0.4 percent growth in the economy this year. Leading German economic institutes predict the country’s economy to grow by 0.3 percent this year.