German industrial production drops in April, economy to grow moderately in Q2

German manufacturing made a subdued beginning to second quarter. Following the considerable decline in orders seen yesterday, production has also fallen in April by 1.7 percent. At 1 percent, the decline in total industrial production was just slightly more moderate because of a clear rise in construction output, although this was significantly more subdued than the consensus expectations. Thus, it is becoming increasingly apparent that the German economy has recorded only moderate growth in the second quarter, noted Commerzbank in a research report.

Industrial production fell 1.7 percent sequentially and countered the upwardly revised increase in March. Because of a clear plus in construction output, the fall in industrial production, which is usually the main focus, was slightly smaller at -1 percent. However, the April figures was around 0.5 percent below the average for the March quarter.

The subdued production figures fit the subdued development of incoming orders in recent months. The trend for production is indicating downwards and it shows that production is likely to come in even lower in the months ahead. This makes it increasingly likely that the German economy has recorded moderate growth again in the second quarter.

“The foreign trade figures for April, also published today, likewise point in this direction, as exports have probably also fallen marginally in real terms this month while imports have risen quite significantly”, added Commerzbank.

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