In November, German industrial production dropped by 0.6% M/M, broadly in line with expectations. The details show that weakness was based in the manufacturing sector (-1.0% M/M) and in energy (-0.4% M/M), while construction rebounded by 4.5% M/M.
Within the manufacturing sector, weakness was broad-based as production of intermediate (-1.4% M/M) and capital (-1.0% M/M) goods and durable (-3.3% M/M) and non-durable (-0.2% M/M) consumer goods all dropped in November. These data confirm what the business confidence indicators suggested, that activity slowed significantly in Germany. This morning however, the trade data showed a more encouraging development, as exports picked up in November, but we doubt that exports will be strong enough to keep Europe’s biggest economy out of contraction in the fourth quarter.