GERMAN DATA
German industrial production declined by 2.4% M/M in July, remaining below expectations of -0.5% and more than reversing June's strong +1.7% (upwardly revised from +1.4%). On a 3M/3M basis, industrial production declined by 2.7%. Combined with rather weak July 'core' factory orders data and declining sentiment, this suggests that the strong June was indeed only a one-off for the industrial sector, and weakness is set to continue.
- On a yearly basis, production declined 5.3% (vs -3.5% cons; -3.7% prior, revised from -3.4%).
- Looking at the main categories, only construction saw a slight increase on the month (+0.3% vs +1.2% prior), its second consecutive increase. Energy production declined by 1.9% (+1.6% prior), and manufacturing declined by 3.2% (1.9% prior).
- Within manufacturing, a drop in the motor vehicles sector (-8.1% M/M, the category also saw a deep drop in May before rebounding last month; 3M/3M measure at -4.5%) was particularly noteworthy. Against this backdrop, VW recently announced plans for a reduction of its European production footprint - discussions ongoing - but nevertheless showing that the auto industry is struggling in Germany.
- Also metal products / machinery production and the computer / electrical sector appeared weak in July (see table).
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