(Bloomberg) -- German industrial production rebounded in August to erase a drop a month earlier, offering some hope of stabilization for manufacturing as Europe’s largest economy grapples with recession fears.
Output increased 2.9% from the previous month in August, better than the 0.8% median estimate in a Bloomberg survey. In July, it fell by the same percentage, a revision showed. On a three-month basis, production remains 1.3% lower than in the previous period, the statistics office said Tuesday.
The report comes on the heels of a spate of bad news for the struggling economy and just a day before revised government forecasts are likely to show the economy stagnated or even contracted in 2024, according to people familiar with the matter.
The economy has been weighed down by the weakness of its industrial sector amid Russia’s shutdown in natural gas supplies after the invasion of Ukraine, as well as feeble Chinese demand and the car industry’s difficulties in pivoting to electric vehicles.
“Currently, production in the automotive industry fluctuates considerably from month to month and this has an impact on the monthly development of production in industry as a whole,” Destatis said.
What Bloomberg Economics Says...
“The step-up in Germany’s industrial production in August does little to counteract the growing evidence that the economy was stuck in a recession over the summer. We expect the industry weakness to continue in the near term, dragging down economic activity. As such, Europe’s biggest economy is likely to stall this year, with risks skewed to the downside.”
—Martin Ademmer, economist. For full react, click here
The Bundesbank said last month that gross domestic product may have stagnated or fallen in the third quarter, following a slight drop in the prior three months. It stressed, however, that a severe economic slump looks unlikely as things stand.
Some support may come from further European Central Bank interest-rate cuts. Weaker-than-expected economic-growth data and a faster retreat in inflation for the 20-nation bloc have driven expectations of another reduction next week — something President Christine Lagarde has also hinted at.
--With assistance from Joel Rinneby and Kristian Siedenburg.
(Updates with Bloomberg Economics after fifth paragraph)
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