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Energy Costs Fire Cuts In Production Levels

GERMAN DATA
MNI (London)

GERMANY AUG IND PROD. -0.8% M/M (FCST -0.5%); JUL 0.0%r M/M

GERMANY AUG IND PROD. +2.1% Y/Y (FCST +2.3%); JUL -0.8%r Y/Y

  • The German industrial production print for August saw a -0.8% m/m contraction, after stalling in July.
  • The index has been below 2015 levels since March.
  • Expansion in consumer goods (+1.8% m/m) and capital goods (+1.2% m/m) show that both short-term and long-term productions plans remain relatively in tact, however the -2.4% m/m slide in intermediate goods production implies that medium-term production plans are being slowed into year-end.
  • Low water levels of the Rhein river hampered German chemical and petroleum production and a marked slowdown was experienced in energy-intensive industrial sectors (-2.1% m/m) as firms cut production due to high energy costs.
  • As energy costs remain elevated and factory orders contract (notably in the eurozone), German industrial production is likely to be a substantial drag on euro area growth into year-end.

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