German Industry Produced Less, Recession Looms

Germany’s industrial production fell in October. High energy prices, in particular depressed production. The lower production is a new indication that the largest economy in Europe is heading for a recession.

The decline was particularly noticeable in energy-intensive companies.

German industrial production fell by a marginal 0.1 percent every month. Production by major energy consumers fell by 3.6 percent. This decrease was offset by an increase in construction output of more than 4 percent. Despite the modest contraction, the German industry performed better than expected.

In recent months, the German processing industry has struggled to fill order books appropriately. This has everything to do with declining demand due to the global economic slowdown. Even if the threat of gas shortages recedes, there are still plenty of uncertainties to hold back the industry.

According to ING experts, the industrial figure is the final piece of a series of hard macro figures from Germany in October. While the economy has not fallen off a cliff, it is continuing its long path to the recession, the economists say. They sum up that, in addition to declining industrial production, the retail sector underperformed sharply, and exports also fell.

New orders are down 15 percent since the start of this year. On the other hand, stocks have also increased since the summer. Usually, according to experts, these are generally not good omens for future industrial production.

Yet there are also positive points. For example, various government stimulus packages have been introduced, and the national gas reserves are full. Companies and households are also working on reducing gas consumption. Furthermore, despite the decline, the German industry appears more resilient than previously thought. But a recession still seems inevitable, it sounds.

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