Industrial production in Germany increased by 1.8% in October 2023.

Germany's Industrial Production Exceeds Expectations

In Germany, industrial production showed an increase of 1.8% in October 2023, thanks to contributions from the construction and manufacturing sectors. This increase is based on preliminary data announced by the Federal Statistical Office of Germany (Destatis).

Seasonally and calendar-adjusted industrial production rose by 1.8% in October compared to September. Furthermore, nationwide industrial production reached its highest increase since March in October.

Industrial Production Also Increases Year-on-Year

Compared to October 2023, industrial production also increased by 0.8% compared to the same month last year. The data for September was revised from a reported 1.3% increase to 1.2%. The markets had anticipated a growth rate of 0.4% for industrial production in October.

Growth Excluding Energy and Construction

The data shows that industrial production excluding energy and construction increased by 1.5% in October. The production of capital goods rose by 2.1%, while consumer goods production also increased by 2.1%. Additionally, energy production saw a 1.4% increase, while construction experienced a 3.3% rise.

Expectations for the End of 2023

The German Ministry of Economy and Climate Protection indicated that while there was a significant increase in new orders, external demand in the industrial sector continued to be weak. It was noted that public defense contracts have increased demand for capital goods.

However, issues in the manufacturing sector, particularly the ongoing difficulties in material supply in the automotive industry, have combined to highlight that no significant recovery in industrial activity is expected by the end of the year.

Analyses and Future Expectations

The Chief Economist of Hauck Aufhauser Lampe Privatbank, Alexander Krüger, stated that while the increase in production is a positive development, the current order situation raises concerns about the continuity of this rise.

Head of ING Global Macro Research, Carsten Brzeski, expressed that the consecutive two-month production increase indicates that industrial production has reached its lowest point. However, high energy prices, cyclical headwinds, and other structural challenges are expected to complicate this process.

Production Expectations for 2025

German manufacturers state that the economy is experiencing its deepest crisis in 76 years, forecasting a 2% contraction in industrial production this year. The President of the Federation of German Industries (BDI), Peter Leibinger, expressed that it is concerning that production figures have contracted for the ninth consecutive quarter.