IP Y/Y Growth Seen Negative Until Q4; 3M/3M Measure Uptick In Feb

German industrial production exceeded expectations in January on the monthly measure at +1.0% M/M (vs +0.6% cons; -2.0% prior, revised from -1.6%) but is still cleraly in negative terrirory on a yearly comparison at -5.5% Y/Y (vs -4.8% cons; -3.5% prior, revised from -3.0%).

• Cagetory weightings were updated. Particularly, the manufacturing industry weighting decreased by -4.6pp to 75.2%, which was made up for by increases in the weighting of the energy supply and construction industries (+1.9pp to 7.2% and +3.0pp to 17.1%, respectively). Within manufacturing, car (and car parts) manufacturing saw the strongest decrease, by -2.0pp to 12.2%.The reweighting likely allowed for the simultaneous miss on the yearly measure and beat on the monthly measure.
• On total production, the less volatile 3M/3M measure ticked up in January, coming in at -1.5% Y/Y, the highest since May 2023, but still printed in negative territory for the 9th consecutive month.
• Interestingly, energy intensive industries were a strong upside driver at +2.8% M/M (vs -4.1% prior), the highest increase since January 2023. On a longer-term view, the sector is still in a very weak condition, however, with the 3M/3M measure below 0 for the 23rd consecutive month.
• Looking at individual components of production excluding the energy and construction industries, intermediate goods production increased by +4.4% M/M (vs -5.0% prior), its highest increase since January 2023. Investment goods production decreased by -2.1% M/M (vs -1.3% prior), durable goods came in at +1.7% (vs -1.1% prior), non-durable goods at +4.7% M/M (vs -0.3% prior), consumption goods at +4.0% M/M (vs -0.4% prior).
• A split across industries showed a mixed picture in January. Production in the construction industry inclined by +2.7% M/M (vs -3.1% prior), both the chemical and food industry also saw positive developments, at +4.7% M/M and +5.9% M/M, respectively. Vehicle production was very weak, however, coming in at -7.3% M/M (vs -2.5% prior), the lowest monthy rate since March 2022.
• Looking ahead, there are little signs of a speedy recovery in German industrial production. The manufacturing PMI has ended its 6-month uptrend in February (42.5 vs 45.5 Jan) and the government's plans on fiscal measures to combat the ongoing weakness are expected to only provide limited impact.
• MNI's proprietary conensus estimate for industrial production, consisting of analysts from large sellside institutions, was revised downwards during the last month by an average of -0.4pp for each quarter in 2024, and currently sees growth negative on the yearly rate until Q3'24 (currently at -5.2% Y/Y Q1, -3.4% Q2, -0.3% Q3, +1.9% Q4).

MNI, Destatis