German industrial production experienced a continuous decline for the seventh month in a row, as per the latest official statistics, marking the most extended period of downturn since the early 1990s post-reunification era.
In December, there was a significant 1.6% drop in output compared to the previous month, as reported by the federal statistics agency Destatis. This followed a revised decrease of 0.2% in November.
This decline exceeded the expectations of analysts at FactSet, who had anticipated a smaller decrease of 0.35%, thus concluding the longest sequence of declines since 1993.
Melanie Debono from Pantheon Macroeconomics characterized the data as “ugly,” predicting the industrial recession to persist into the current quarter.
The unexpected steepness of the decline was primarily due to significant downturns in the chemical and construction industries. In contrast, the automobile sector experienced a 4% increase in production.
For the entire year of 2023, industrial output was down by 1.5% compared to the previous year, according to Destatis, and it remained below the levels seen before the pandemic.
The vital industrial sector of Germany, historically dependent on affordable Russian gas imports, has been struggling since the onset of the Ukraine conflict, which led to soaring energy costs.
Compounding these challenges are higher interest rates and diminished export demand, contributing to the economic difficulties as the country’s economy contracted by 0.3% last year.
