Rebound In German Industrial Production Weakens In July

The rebound in Germany’s industrial production lost momentum in July though the output continued to expand, data from Destatis revealed Monday.

Industrial production grew 1.2 percent on month, much slower than the 9.3 percent increase seen in June and economists’ forecast of 4.7 percent.

On a yearly basis, industrial output fell 10 percent, following June’s 11.4 percent decrease.

Data showed that production in the automotive industry rose by 6.9 percent month on month. However, it was still by just over 15 percent lower than in February 2020, ahead of the coronavirus pandemic hit the economy.

The economy ministry said the recovery in overall production that has been observed since May continued in July, albeit at a slower pace. The ministry observed that production reached almost 90 percent of pre-crisis levels.

The improved sentiment among companies and the reduced short-time work suggest that the catch-up process will continue in the coming months, although it will likely take some time, the ministry noted.

The German economy remains on track for a strong surge in the third quarter, Carsten Brzeski, an ING economist said. It is too early to tell how much momentum will be left tthereafter.

Data showed that excluding energy and construction, industrial production was up 2.8 percent on month in July.

Within industry, the production of intermediate goods showed a monthly growth of 4.0 percent. Consumer goods output gained 1.8 percent and the production of capital goods moved up 2.1 percent.

Outside industry, energy production fell 0.6 percent in July and the output in construction decreased 4.3 percent.

Data released last week showed that industrial orders grew only 2.8 percent in July due to a sharp fall in domestic demand.

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