Germany's industrial production and exports experienced a rebound in November; however, the overall economic outlook remained bleak due to job reductions in the manufacturing sector and the potential increase in U.S. trade tariffs.
According to Destatis data released on Thursday, industrial output rose by an impressive 1.5 percent month-over-month, surpassing the anticipated moderate growth of 0.5 percent, and contrasting with October's revised decline of 0.4 percent.
Despite this monthly growth, industrial production for the three months leading to November was still down by 1.1 percent compared to the previous period. When excluding energy and construction, industrial production saw a monthly rise of 1.0 percent, though it declined by 3.2 percent annually.
The data indicated a 5.6 percent increase in energy production and a 2.1 percent rise in the construction sector. The manufacturing of additional transport equipment also contributed positively. Specifically, the production of capital goods increased by 1.4 percent, consumer goods production went up by 0.9 percent, and intermediate goods output edged up by 0.5 percent.
Compared to November 2023, industrial production was down by 2.8 percent, an improvement over the 4.2 percent drop in October. Despite the monthly uptick, the broader trend shows German industry facing significant challenges, according to Franziska Palmas, an economist at Capital Economics. She pointed out that weak manufacturing activity surveys for December, coupled with declining industrial orders, suggest that industrial output is likely to remain subdued in the months ahead.
German exports saw a monthly growth of 2.1 percent, recovering from a 2.9 percent decrease in October, slightly exceeding the forecasted climb of 2.0 percent. Conversely, imports continued to decline, worsening to a drop of 3.3 percent from just 0.3 percent in October, despite economists expecting a 0.7 percent growth in imports.
As a result, the trade surplus widened to EUR 19.7 billion in November, up from EUR 13.4 billion in October. Carsten Brzeski, an economist at ING, noted that while the recovery in industrial production and exports is welcome, it is unlikely to prevent another quarter of economic stagnation.
Brzeski further remarked that the current increase in production is more of a technical rebound following two months of contraction, rather than a sign of sustained recovery.
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