German industrial production falls in January

German industrial production dropped sharply in the month of January on a sequential basis. The beginning of the new year for German manufacturing has not been an entire failure. Although order intake dropped sharply, manufacturing production rose a bit in January. Today’s overall fall in the headline industrial production is mainly because of significant declines in the construction and in energy production, whose output often fluctuates sharply. There was also a slight decline in exports, although this has to be seen against the backdrop of very solid growth in the fourth quarter.

It would be decisive for the development in the months ahead whether the considerable decline in new orders in January would prove to be an outlier or the beginning of a lastingly weaker development. In view of the still very good mood among firms, the forming might prove wright, especially since there are often problems with seasonal adjustment at the turn of the year, noted Commerzbank.

“We therefore expect a noticeable increase in orders for February. Then our trend for production in manufacturing, calculated on the basis of orders, would also continue to show a clear upward trend and manufacturing would go on to strongly boost growth of the German economy”, added Commerzbank.

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