German industrial production falls again in August, economy likely to pick up towards start of 2019

German industrial production dropped for the third straight month in August. On a sequential basis, the industrial production fell 0.3 percent in the month, as compared with economists’ expectations of a slight rise of 0.3 percent. Excluding the construction and energy sectors, manufacturing production dropped a bit by 0.1 percent.

Seemingly, the automotive industry still has issues with the conversion to the new EU-wide exhaust emission tests WLTP (Worldwide harmonized Light Duty Test Procedure). Seasonally adjusted production in the vehicle construction sector dropped 6.5 percent compared to the previous month, after it had already dropped by nearly 6 percent in July.

Excluding the “auto effect”, manufacturing production has risen; however, in July/August it was still over 1 percent below the second quarter, which will also have a negative effect on overall economic growth. Meanwhile, the downward trend in incoming orders implies that the final quarter will also be softer, noted Commerzbank in a research report.

Nevertheless, there appears to be light at the end of the tunnel. The Ifo business climate seems to have steadied and the Early Bird continues to indicate towards good framework conditions. Therefore, the German economy is expected to pick up again towards the start of 2019, added Commerzbank.

At 11:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at -43.2093, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 45.7839. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex