Brussels (Brussels Morning) German industrial production, spurred on by automobile sales, grew in October, showing that the manufacturing sector focused on exports helped the nation’s economy off to a good start in the final quarter this year, Reuters reports,
German Federal Statistical Office data released today, Monday, shows industrial output in October increased 3.2% compared to September, following growth of 2.3% from the month before. This represents the largest growth since June and doubles the Reuters forecast of 1.6% growth.
Output still below pre-crisis levels
Compared to the pre-coronavirus month of February, industrial production in October was approximately 5% lower. In the automotive industry, Germany’s largest industrial sector, production increased by close to 10% on a monthly basis, but was about 6% lower compared to pre-pandemic levels.
The German government has provided companies and citizens with unprecedented aid and stimulus measures this year, including incentives to buy hybrid and electric automobiles, to help them weather the coronavirus crisis.
VP Bank Chief Economist Thomas Gitzel notes that the industry sector had an excellent start to this year’s final quarter, calling the gains in industrial output extraordinary. Gitzel predicts that the GDP decline in the final quarter this year will not be as severe in Germany as in other EU member states thanks to the excellent industrial performance.
Data released on Friday show that the monthly jump in industrial orders exceeded expectations, which is in line with the extraordinary growth of industrial production. Additionally, surveys and high-frequency data, including truck toll mileage, point to a comparatively high of activity in the manufacturing sector in November despite lockdown provisions imposed to control the pandemic.
Industry recovering, GDP expected to stagnate or drop
Despite positive news on the industrial front, the services sector is expected to contract sharply in the final quarter because the latest lockdown forced so many businesses to close on 2 November. The net effect is that the economy is expected to stagnate or shrink in the final three months of 2020.
The Ifo Institute for Economic Research notes that expectations in the industrial sector for the coming months have worsened, largely due to pessimism in consumer-oriented industries. The Ministry for Economic Affairs and Energy warns that the second wave of coronavirus infections and the lockdown bring into question future growth of the industry sector.