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Sunday, October 17, 2021

Germany – economy. Industrial production down sharply. Expert comments

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In Germany, industrial production fell by 4.0 percent month-on-month in August, while in the previous month it rose by 1.3 percent, after a revision from +1.0 percent, the Federal Statistical Office said in a press release. Analysts expected production to decline by 0.5 percent month-on-month.

YoY industrial production increased by 1.7%, compared to the previous increase by 6.0%, after a correction from +5.7%. Here, analysts expected an increase of 5.0 percent.

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Industrial production in Germany – economists’ comments

“Industrial production in Germany is doing worse and worse. In August, it fell by 4% m / m and is 9% lower than it was before the pandemic. German companies are strongly affected by supply constraints, which 70% of them complained about in the third quarter.” – wrote economists from PKO BP Research.

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“Very weak data from the German industry for August (orders -7.7% m / m, production -4.0% m / m). A lot of trouble for the automotive industry and supply constraints, but there were also signs of weak demand foreign (China?) “- experts from Pekao Analysis write.

“Industrial production in Germany is still far from the pre-pandemic peaks (-10.5 percent after August). The contrast with the orders could not be greater and we have never seen such a crossover between orders and their implementation in the German data. industry we can estimate at 2.5 times the typical monthly production. In other words, unrealized orders would suffice for 19 (sic!) months of uninterrupted production “- indicated in the publication of Bank Pekao.

Bank Pekao economists stated that it is not known how much of the outstanding orders are still overdue, and what has been or will be canceled. This means that a rapid increase in German industrial output cannot be expected once the supply problems are resolved.

“The August reading of industrial production means that in Q3 the total production of industry and construction will fall by 1.9% q / q, which will be the worst result since last spring. This implies at best GDP stagnation in Q3, and with high probability – a slight decline in German GDP in q / q “- forecast economists from Pekao.

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