Germany’s industrial production experienced a larger decline than anticipated in July, indicating that the country’s manufacturing sector is struggling amidst a global decrease in demand for its products.
On a seasonally and calendar-adjusted basis, output decreased by 0.8% compared to the previous month. While this is less severe than the 1.4% dip observed in June, it still fell short of economists’ predictions of a 0.2% decline, according to data provided by German statistics office Destatis on Thursday.
This decline in production follows a significant drop in new manufacturing orders, which fell by 11.7% in July compared to the previous month.
Economists have cautioned that Germany’s industrial slowdown will hinder its recovery from the recession it experienced during the winter. The Kiel-based IfW Institute stated that the country’s economy would contract more severely in 2023 than previously projected due to weak industrial activity and decreased demand resulting from rising interest rates.
When excluding energy and construction, which can provide greater insight into the industry’s underlying strength, manufacturing was even weaker in July, with a decline of 1.8%. Production of capital goods saw a significant drop of 2.9%, while consumer goods experienced a decline of 1.0%, according to Destatis.
In contrast, energy production increased by 2.2% and construction output climbed by 2.6%.
However, when looking at a less volatile three-month comparison, industrial production from May to July was 1.9% lower than the previous three months, as stated by the data.