German industrial production falls sharply in September

German industrial production dropped sharply in the month of September, as was anticipated. Industrial production dropped 1.6 percent on a sequential basis. This is largely because of a return to normal in the auto sector, where production in August had been distorted upwards by a special factor. On the contrary, the underlying trend still indicates upwards and so the real GDP is expected to record a significant growth in the fourth quarter after a huge rise in the prior quarter, noted Commerzbank.

The considerable decline in industrial production in September might looking disappointing. But this decline should be seen against the backdrop of the huge rise of 2.6 percent in August that benefitted from a special effect in the auto sector.

Without the auto sector, the drop in manufacturing sector output reached 0.4 percent in September. For the third quarter as a whole, the rise therefore amounts to almost 1 percent for industry as a whole. This implies a solid growth rate similar to the first two quarters for the German economy.

“We currently assume that real GDP has again grown by 0.6 percent on Q2. For Q4 as well, a large plus in industrial production (and thus also in the overall economy) currently seems to be on the cards. Following the recent set of very good order data, our production trend we calculate based on orders is clearly pointing upwards”, added Commerzbank.

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