German industrial production falls again in November, industry likely to gain momentum in long term

German industrial production dropped in November. On a sequential basis, industrial production fell 1.9 percent, as compared with consensus expectations of a rise of 0.3 percent. Manufacturing production, which excludes construction and energy production, dropped 1.8 percent sequentially. Construction output dropped 1.7 percent, while energy production dropped 0.8 percent.

Production figures have now disappointed for the second consecutive month, especially as the October figure has been a bit revised downwards to -0.8 percent from -0.5 percent. Another disappointment comes from the automotive industry, which also produced less in November than in October and was therefore unable to compensate for the fall in production because of the changeover to the new exhaust emission procedure in summer.

Nevertheless, production might stabilize in the near future, noted Commerzbank in a research report. This is because the trend in orders in now pointing sideways again, after pointing downwards from the beginning to summer 2018.

“In the longer term, we are confident that German industry will gain some momentum again. Car manufacturers are likely to catch up on production, the ECB's monetary policy remains investment-friendly and the economic stimulus package in China is likely to boost the Chinese economy, from which the German economy will also benefit”, added Commerzbank.

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