6th Consecutive Fall In Industrial Production Amid Broader Weakness

German Industrial Production missed expectations in November at -4.8% Y/Y (working day adjusted, vs -4.0% survey and -3.4% prior revised from -3.5%) and -0.7% M/M (seasonally adjusted, vs +0.3% cons and -0.3% prior, revised from -0.4%).

• This marked the sixth monthly decline in a row. The less volatile 3M/3M measure also paints a weak picture at -1.9%, the sixth month in a row below -1%.
• Looking at individual components excluding the energy-intensive and construction industries, the decline was broad-based with investment goods production at -0.7% M/M, intermediate goods production at -0.5%, and consumption goods production at -0.1% (all SA).
• Production in energy-intensive industries saw a clear monthly uptick of +3.1% M/M (seasonally adjusted vs -1.3% prior) but the level of production is still below pandemic levels and was -4.0% Y/Y. The energy tax relief which came into play as of January 1st might provide some slight support for the industry but is not expected to provide a major shift in German industrial competitiveness.
• In the construction industry, the decline is intensifying at -2.9% M/M (SA, the weakest value since five months, vs -1.7% prior) and -2.3% 3M/3M (the sixth decline in a row, vs -2.0% prior) which might be influenced by higher interest rates negatively impacting housing market activity.
• The poor IP data follows the release of other data pointing to ongoing weakness in German economic conditions. These include December's Manufacturing PMI, which indicated ongoing weak demand, and November factory orders, which saw a decline in core measures which was stronger than the headline suggested.

MNI, Destatis