German Industrial Output Unexpectedly Rises in September, Led by Carmakers

In brief

• German industrial output rose 0.7% in September from August, beating expectations of a slight decline.
• The automotive sector drove the increase with a 17.1% monthly jump, partly reflecting a low base after production disruptions.
• Over the third quarter, output was still 0.4% lower than in the previous quarter, and risks to the recovery remain.

Output beats expectations

German industrial companies produced more in September than in the previous month, the Federal Statistical Office said on Friday, citing preliminary data (Industrieproduktion wächst überraschend - Autobranche legt zu – tagesschau.de) (Industrieproduktion in Deutschland wächst im September überraschend – DER SPIEGEL). Output across industry, construction and energy suppliers rose 0.7% month on month. Economists polled by Reuters had expected stagnation, and the figure follows a 1.0% increase in August. Excluding energy and construction, industrial production climbed 1.7%.

Carmakers lead the gain

The automotive sector accounted for most of the increase, with production up 17.1% from August. Officials cautioned that the jump partly reflects a low base: production in the two preceding months was held back by production changeovers and factory holidays. Pharmaceuticals also contributed to the rise (Produkcja przemysłowa w Niemczech rośnie drugi miesiąc z rzędu. Motoryzacja i farmacja napędzają odbicie – Puls Biznesu).

Longer-term picture still weak

Over the three-month comparison, which is less volatile, output in the third quarter was 0.4% lower than in the second quarter. Commentators noted that the summer had been weighed down by drought and geopolitical conflicts (Wirtschaftswachstum: Produktion in deutscher Industrie wächst trotz erwarteter Dämpfer – ZEIT ONLINE).

Recovery risks remain

Orders and business sentiment have improved, raising hopes of a broader upturn. However, several risks could still slow a lasting recovery, according to analysts.

Read also

• German Economy Grows 0.2% in Third Quarter, Beating Expectations