Manufacturing Stalls in April; Overall Q1 IP Weaker Than Thought

German industrial production came in short of expectations in April, printing -0.1% M/M (vs +0.2% cons; -0.4% unrevised prior). On a yearly comparison, industrial production continued to decline but at -3.9%Y/Y (vs -3.0% cons) this was less of a decline than the revised April print of -4.3% Y/Y (revised from -3.3%) amid base effects.

• Revisions driven by price index updates suggest that German industrial activity was weaker on the margin in Q1 than previously thought - with February's sequential growth further downwardly revised (by a further -0.5p to +1.2% M/M; the initial print was +2.1%).
• Taken by itself, April's stall in the headline rate came on the back of weaker construction production, which partly reversed its weather-related strength from earlier in the year, and stronger energy production. These two factors broadly net each other out. Manufacturing came in at +0.3% M/M (vs -0.2% prior).
• This suggests growth in the German industrial sector is still not really picking up, even though the 3M/3M measure increased for the fourth consecutive month and now printed a comparatively solid +0.9% (vs +0.4% prior).
• Looking at the individual categories within manufacturing, motor vehicles (+4.2% M/M vs +0.3% prior) and food (+3.4% vs -2.8% prior) stand out positively while wood (-2.9% M/M vs +2.2% prior) and glass production (-1.9% vs -1.0% prior) printed weaker.
• Looking ahead, MNI's collation of sellside analysts sees a recovery in IP for the next quarters, with the Q2 & Q3 median estimates standing at -3.5% Y/Y (consensus has been upwardly revised by 0.5pp during the last month), and -0.4% Y/Y (+0.2pp revision). The truck toll index, which is indicative of industrial activity, meanwhile printed lower again in May (-1.0% M/M vs +0.9% prior).
• Survey data continues to suggest that sentiment in German industry is starting to look a little less gloomy, although from a very low level.

MNI, Destatis