Germany's industrial production shows signs of recovery, with a month-on-month increase of 1.5% in November
Germany's seasonally adjusted industrial output increased by 1.5% month-on-month in November, exceeding the expected 0.5%. Although industrial production has shown some recovery, the overall economic outlook remains pessimistic, with GDP growth expected to be very modest in 2025. Factory orders plummeted by 5.4% in November, exports grew by 2.1%, and imports fell by 3.3%. Germany faces challenges of high costs and declining competitiveness, with economists warning of a potential return to recession. The Federal Statistical Office of Germany will release the preliminary estimate of GDP for 2024 next week
According to the Zhitong Finance APP, Germany's seasonally adjusted industrial output increased by 1.5% month-on-month in November, better than economists' expectations of 0.5%. The growth in industrial production raises hopes that the country's struggling manufacturing sector may have begun to stabilize at the end of last year.
The German Federal Statistical Office also stated that output decreased by 1.1% over a three-month period. Meanwhile, exports rose by 2.1% in November, while imports fell by 3.3%.
The signals from the German economy are mixed, as a report released on Wednesday showed that factory orders plummeted by 5.4% in November. This figure was affected by volatile large-scale orders; without these orders, the indicator would have increased by 0.2%.
German manufacturing is facing a prolonged slump. Concerns about deindustrialization are playing a significant role ahead of Germany's early elections in February. Chancellor Olaf Scholz is expected to lose the election to Friedrich Merz, the leader of the Christian Democratic Union. The current economic downturn is primarily attributed to high costs of energy and other inputs, which are worsening Germany's competitiveness on the global stage.
Economist Martin Ademmer stated, "Although the output growth in November was stronger than expected, the short-term outlook for German industry remains bleak. We expect that industrial weakness will continue to drag down overall economic activity, and after two years of contraction, GDP growth in 2025 will be very modest. Further troubles in manufacturing, such as the potential for the U.S. to significantly raise tariffs on European exports, could easily push Germany back into recession."
Germany's GDP is expected to decline for the second consecutive year, with the German Federal Statistical Office set to release its first estimate for 2024 next week. The German central bank expects a slight rebound of only 0.2% in domestic GDP this year, driven by increased foreign demand.
A major risk is that Donald Trump may threaten to impose widespread tariffs upon his return to the White House this month. The European Central Bank may provide some assistance, as it is expected to continue cutting interest rates after four reductions in 2024