Surprisingly, German manufacturing output decreases
"The slide in manufacturing output persists," DIHK states. Despite predictions of slight growth, manufacturing output dropped in October. Multiple challenges are reportedly impacting German companies.
Germany's manufacturing sector continues to struggle. Domestic businesses unexpectedly lowered their output once more in October, notably in the struggling automotive sector. Compared to September, output in manufacturing, energy, and construction decreased by 1.0 percent, as per the Federal Statistical Office in Wiesbaden. Analysts had projected a rise of 1.0 percent. Compared to last year, output plummeted unexpectedly sharply by 4.5 percent.
"The slide in manufacturing output persists," DIHK economist Jupp Zenzen wrote. "Production is falling to its lowest level since the pandemic." High costs, economic instability, labor shortages, and bureaucracy are weighing on businesses. Order books remain quiet, with demand particularly low domestically.
However, the production slowdown in the preceding month of September was slightly less severe than initially thought. The Federal Office revised the decline in the monthly comparison to 2.0 percent from 2.5 percent. While production in construction remained stable in October, it fell almost nine percent in energy production, adjusted for seasonality and calendar dates. Manufacturing output declined by 0.3 percent. A decline in manufacturing output within the struggling automotive sector was particularly burdensome, at 1.9 percent.
New challenges emerge
The Kiel Institute for the World Economy highlighted the eroding competitive position of German manufacturing companies on international markets. Additionally, new challenges loom from potential trade disputes with the US, as the sector is highly reliant on exports.
Commerzbank chief economist Jörg Krämer described a weak start to the fourth quarter. "A swift recovery is unlikely, given the low level of incoming orders and the weakness in the Ifo business climate. The German economy may at best remain stagnant during the winter half-year."
In energy-intensive manufacturing sectors, including the chemical industry, output dropped by 0.9 percent compared to September, after adjusting for seasonality and calendar dates. VP chief economist Thomas Gitzel wrote, "The industrial production is suffering from the weak incoming orders of the past two years. At the same time, the overall weak output is also impacting energy production. Energy-intensive businesses appear to be particularly affected."
The Kiel Institute of the World Economy has expressed concerns about the eroding competitive position of German manufacturing companies on international markets. This institute, specifically, has highlighted potential trade disputes with the US as a new challenge, given the sector's reliance on exports.
Amidst these challenges, the Institute of the World Economy Kiel has also warned about the impact of potential trade disputes with the US, which could pose a significant threat to German manufacturing companies due to their heavy reliance on exports.
