German industrial production dropped sequentially in October, coming in much below than consensus expectations. Following the considerable fall in new orders, industrial production also dropped significantly by 1.7 percent sequentially in October.
Output in October was 1.9 percent lower than the third quarter average. If production stayed at this level in the next two months, this might result in a sharper quarter-on-quarter decline than in the last four quarters.
“However, our trend in industrial production, calculated on the basis of new orders in recent months, does not show a downward trend as strong as the decline in October suggests”, said Commerzbank in a research report.
Thus, a marked counter-movement is likely in November or at the latest in December. However, industrial production might possibly fall considerably in the fourth quarter, which is consistent with the projection that the German economy again barely grew in the fourth quarter of 2019.
“A turnaround in manufacturing and thus of the German economy as a whole is thus not yet in sight. While there is some hope in the stabilisation of sentiment indicators which is currently taking shape, hard data remain weak so far”, added Commerzbank.
