2020.01.0908:40:00UTC+00German Industrial Output Grows Most In 18 Months

German industrial production grew at the fastest pace in one-and-a-half years in November, while exports declined for the first time in three months and imports logged an unexpected fall.

Industrial production grew by a more-than-expected 1.1 percent on a monthly basis, offsetting a revised 1 percent fall in October, data from Destatis revealed Thursday. Economists had forecast a 0.8 percent rise. This was the fastest increase since May 2018.

On a yearly basis, industrial output declined 2.6 percent after falling 4.6 percent in October. Output was forecast to drop 3.7 percent.

The economy ministry said the slowdown in the industry has not yet been overcome. The stabilization of incoming orders and improved business expectations suggest that the industrial economy should brighten somewhat in the coming months, the ministry added.

Excluding energy and construction, industrial output advanced 1 percent in November. Energy production was down by 0.8 percent, while construction output grew 2.6 percent.

Within industry, production of capital goods increased 2.4 percent and that of consumer goods rose 0.5 percent. Meanwhile, intermediate goods showed a decrease of 0.5 percent.

Another data showed that exports declined for the first time in three months in November. Exports were down by a more-than-expected 2.3 percent on month, reversing a 1.5 percent rise in October. Exports were forecast to fall 0.9 percent.

At the same time, imports fell 0.5 percent, offsetting a 0.5 percent rise in the previous month and in contrast to a 0.2 percent rise economists had forecast.

As a result, the trade surplus fell to a seasonally adjusted EUR 18.3 billion from EUR 20.4 billion in October.

On a yearly basis, exports slid 2.9 percent and imports decreased 1.6 percent. Consequently, the trade surplus decreased to an unadjusted EUR 18.3 billion from EUR 20.2 billion last year.

The current account of the balance of payments showed a surplus of EUR 24.9 billion compared to a EUR 23.6 billion surplus last year.

Mixed data from industrial production and trade shows that the manufacturing slump is still not over, ING economist Carsten Brzeski, said.

Despite the latest increase, industrial production is still down compared with the third quarter and it would require another strong increase in December to end the year on a positive note, Brzeski noted. This outcome is rather unlikely given the slump in new orders, the economist added.

The German economy is not expected to recover rapidly and vigorously, Marco Wagner, an economist at Commerzbank said. Important export markets will remain weak in the longer term, and the German economy is hampered by the eroded competitiveness, the economist noted.