In March, German companies cut their production more than they had in a year. Industry, construction and energy suppliers together produced 3.4 percent less than in the previous month, as the Federal Statistical Office announced on Monday.
“The significant decline in industrial production is also a counter-movement to the strong increases before – for example in the car industry,” said Commerzbank-Chief economist Jörg Krämer (56). “But the trend is that production should continue to fall somewhat in the coming months.”
Production in the auto industry collapses by 6.5 percent
Industry alone produced 3.3 percent less in March than in the previous month. “Another piece of bad news from German industry. After the figures for incoming orders were like a punch in the stomach of the German economy, the production figures are picking up,” says LBBW economist Elmar Völker.
It is the third strongest minus in a monthly comparison in the last ten years – except for the Corona slump. “Today’s figures from the industry underline that the danger of recession has by no means been averted,” says Völker.
The automotive industry had a particularly large share in the decline: Production here collapsed by 6.5 percent compared to the previous month. The machine builders produced 3.4 percent less. The particularly energy-intensive sectors of the economy almost all reduced their emissions, including chemical industry with minus 2.0 percent, according to the Federal Ministry of Economics.
Difficult year threatens German industry
The construction industry reported a drop in production of 4.6 percent. You are struggling with higher interest rates and material costs, because of which many projects are no longer worthwhile. Energy suppliers, on the other hand, increased their generation by 0.8 percent.
German industry faces a difficult year in view of rising interest rates. “The general rise in interest rates should slow down investment plans,” said the chief economist at Hauck Aufhäuser Lampe Privatbank, Alexander Krüger.
New business fell in March more than it had since the peak of the corona crisis three years ago: orders fell by 10.7 percent compared to the previous month. Analysts had expected a much smaller setback.
The development in March was almost consistently weak. Significantly fewer orders came from both Germany and abroad. In March, German exports of goods fell by 5.2 percent compared to the previous month. The reason was weaker demand from the most important markets, the EU, USA and China. Capital goods and intermediate goods in particular were ordered significantly less than in February.
Production could be supported by the easing of problems with the procurement of raw materials and preliminary products. In April, complaints from industrial companies about supply bottlenecks decreased for the seventh month in a row. Only 39.2 percent of the companies reported problems, the lowest value in around two years.