German industrial production rebounds in October

BERLIN: German industrial production rose in October after two months of declines, offering a glimpse of light after a series of gloomy economic indicators over raw material shortages that have fuelled rising prices.

Germany’s industry produced 2.8 per cent more compared to a month ago, data published by the federal statistics office Destatis showed on Tuesday.

“It’s good news at the right time,” said Jens-Oliver Niklasch, economist at the regional public bank LBBW.

The indicator had dropped 3.5 per cent in August and 0.5 per cent in September, leading analysts surveyed by Bloomberg to plump for a one per cent rise in October.

On a year-on-year basis, the German industry contracted by 0.6 per cent, and is still 6.5 per cent below the level before the pandemic.

ING macroeconomist Carsten Brzeski said Tuesday’s figures were “finally a glimmer of hope”, but he warns that the optimism may prove short-lived.

“Industrial production had been so weak that any single container coming to Germany and every handful of microchips would immediately lead to a pick-up in production,” he observed.

“However, supply chain frictions have not been resolved, implying that the October industrial data is rather a short-lived rebound than the start of a sustainable recovery or turning point.”

The coronavirus pandemic has led to disruptions in supply chains across the globe, causing shortages of everything from wood to semiconductors.

Germany has reported a series of indicators in the red, while the country battles a violent fourth wave of the pandemic.

Data from Destatis published Monday showed industrial orders in Europe’s largest economy fell by 6.9 per cent in October compared with the previous month, after a small 1.8 per cent rise in September.

Germany’s Bundesbank expects zero-growth in the fourth quarter, after 1.7 per cent for the third quarter. The German government has predicted overall growth to reach 2.6 per cent for the year.

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