German industrial production picks up at fastest rate seen in a year

Factory output in Germany surpasses predictions for February, although a significant recovery seems far off.

German industrial production increased for the second consecutive month in February, according to data released by the country’s official statistics agency on Monday. Compared with January, industrial output increased by 2.1%, the most dramatic monthly rise seen since January 2023. The figure is far more positive than expected, with Reuters analysts having predicted a 0.3% rise. Annual production, however, is still down 4.9%.


The driving force behind the monthly increase was a 7.9% jump in the construction sector, as building projects benefited from milder weather. Carmaking output also rose by 5.7% over the month to February, whilst the chemical industry saw a 4.6% increase. Dragging the industry back, on the other hand, was production in Germany’s energy sector, which dropped by 6.5%.


The industrial slowdown in Germany is largely to blame for the country’s present economic woes. As the nation relies heavily on manufacturing, it was hit particularly hard by Europe’s energy crisis, triggered by disruptions to gas deliveries from Russia.


Germany last year was revealed to be the world’s worst performing major economy. In both the fourth quarter and over the whole of 2023, growth came in at -0.3%. Looking ahead, the picture seems unlikely to improve in the near future, with several of Germany’s leading research institutions predicting GDP growth of just 0.1% for 2024.


German factory orders were also up less than expected in February, according to official data released last week. Exports, meanwhile, are down 2% on the month, amounting to an annual decline of 4.4%.



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