Monday, March 10, 2025 5:10 AM EDT
Image Source: Pexels
Finally, there is some good industrial news out of Germany as industrial production rebounded in January. Another data point confirming the current bottoming out of the industrial slump but not yet a sign of any significant turnaround.
German industry started the year on a more positive note, increasing by 2% month-on-month in January, from -1.5% MoM in December. On the year, industrial production is still down 1.6%. At the same time, the frontloading of exports, anticipating looming tariffs, stopped as German exports dropped 2.5% MoM in January. As imports increased by 1.2% MoM, the trade surplus narrowed. German industrial production remains about 10% below its pre-pandemic levels some five years after the onset of Covid-19.
Bottoming out of industrial slump
Today's data confirms the bottoming out of Germany’s industrial slump. However, it is too early to call any substantial turnaround. Manufacturing capacity utilisation is at lows comparable only to those seen during the financial crisis and the initial lockdowns, order books shrank again in January with particularly weak foreign demand, and inventory levels remain at elevated levels. This still paints a rather unflattering picture of a nation known as an industrial powerhouse.
With looming US tariffs on the EU and the expected modern version of ‘beggar-thy-neighbour’ policies by the new US administration, the short-term outlook for German industry remains anything but rosy. This is not just because of the potential impact on German exports, but more so the effect on German investments if companies were to move production to the US. It is hard to see that last week’s fiscal big bang from the potentially incoming government will be able to lead to an immediate turnaround. However, if the announced stimulus is indeed delivered, it could provide a short-term confidence boost, and enhance the longer-term prospects of the German economy.
More By This Author:
ECB Cuts Rates But The Door To Further Cuts Is Closing Quickly ECB Cuts Rates By 25bp But Direction Of Travel No Longer That Clear German Inflation Remains Unchanged In February
Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...
more
Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. ING forms part of ING Group (being for this purpose ING Group NV and its subsidiary and affiliated companies). The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but ING does not represent that it is accurate or complete. ING does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice.
The distribution of this publication may be restricted by law or regulation in different jurisdictions and persons into whose possession this publication comes should inform themselves about, and observe, such restrictions.
Copyright and database rights protection exists in this report and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent of ING. All rights are reserved. ING Bank N.V. is authorised by the Dutch Central Bank and supervised by the European Central Bank (ECB), the Dutch Central Bank (DNB) and the Dutch Authority for the Financial Markets (AFM). ING Bank N.V. is incorporated in the Netherlands (Trade Register no. 33031431 Amsterdam). In the United Kingdom this information is approved and/or communicated by ING Bank N.V., London Branch. ING Bank N.V., London Branch is deemed authorised by the Prudential Regulation Authority and is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. The nature and extent of consumer protections may differ from those for firms based in the UK. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.. ING Bank N.V., London branch is registered in England (Registration number BR000341) at 8-10 Moorgate, London EC2 6DA. For US Investors: Any person wishing to discuss this report or effect transactions in any security discussed herein should contact ING Financial Markets LLC, which is a member of the NYSE, FINRA and SIPC and part of ING, and which has accepted responsibility for the distribution of this report in the United States under applicable requirements.
less
How did you like this article? Let us know so we can better customize your reading experience.
