Status: 07.09.2022 10:38 a.m
German companies reduced their production in July. Energy-intensive industries in particular have shut down their production. Experts are skeptical about the future.
German companies scaled back production in July due to material shortages and high energy prices. Industry, construction and energy suppliers together produced 0.3 percent less than in the previous month, as the Federal Statistical Office announced today. Economists polled by Reuters had expected a slightly stronger decline of 0.5 percent, after growth of a revised 0.8 percent in June.
“Industry got off to a weak start in the third quarter,” commented the Federal Ministry of Economics on the data. “The curtailed gas supplies from Russia and the high level of uncertainty due to the war continue to cloud the outlook for the rest of the year.”
Chemicals & Co. throttle production
A look at the details shows that energy generation and production in construction have increased significantly compared to the previous month. “In return, production in industry in the narrower sense fell by 1.0 percent,” emphasizes Commerzbank economist Ralph Solveen. This is mainly due to the vehicle industry, which reported a minus of 4.6 percent.
But energy-intensive sectors such as chemicals have also significantly reduced their production. In the energy-intensive industrial sectors, production in July fell by 1.9 percent compared to the same month last year. The decline was therefore significantly stronger than in the manufacturing sector and industry as a whole.
“Since February 2022, production in energy-intensive industry has fallen by 6.9 percent,” emphasizes the Federal Statistical Office. “Obviously, the manufacture of many products is no longer profitable in view of the massive increase in energy prices,” explains Commerzbank expert Solveen.
Recession worries are rising again
The fall in industrial production does not bode well for the growth of the German economy. “In any case, the production data underpin our fears that the German economy will shrink in the third quarter,” said the chief economist at VP Bank, Thomas Gitzel. “This would then be the prelude to a strong economic winter flu with no guarantee of a speedy recovery.”
Economists have been warning for some time that the German economy could slip into recession in the fall. A recession for Germany can no longer be averted, Deutsche Bank boss Christian Sewing was also convinced at today’s opening of the “Handelsblatt” banking summit in Frankfurt.