German industry reports stronger increase in production than expected

From an economic point of view, the month of September is clearly something to be proud of: German industry expanded its production more than expected.

Compared to the previous month, the total production increased by 0.6 percent, as the Federal Statistical Office announced on Monday in Wiesbaden. Analysts had only expected an increase of 0.1 percent. However, production in August fell by 1.2 percent (initially minus 0.8 percent) more than initially calculated.

Year-on-year, production rose 2.6 percent in September. Growth of 2.0 percent had been expected here.

"Production is still affected by the high shortage of primary products," wrote the Federal Statistical Office. Disrupted supply chains as a result of the war in Ukraine and ongoing disruptions caused by the Corona crisis continued to lead to problems in processing orders.

Despite the increase, economists are rather skeptical about further developments. "Industry is living on its large order backlog, so that the weak demand from abroad is not yet having an impact on production," commented Ralph Solveen, economist at Commerzbank.

"However, production is likely to continue to trend downwards in the coming months, since the massive increase in energy prices is making the production of many products unprofitable."

Contrary to the development in industry, production in the energy-intensive branches of industry fell by a total of 0.9 percent. Compared to the previous year, it even fell by 9.7 percent.

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