German Industrial Production Falls In October

German Industrial Production declined almost 2% to 95.7 (2005=100) in October, from 97.5 in September.  Although expectations had been for a small rise, yesterday's sobering report on new orders should have dampened expectations. 

Among the Main Industrial Groups, the biggest declines were in the production of investment goods, 3.55%, and in that of energy, 3.40%.  Production of consumer goods also declined but to a lesser extent, 1.90%.  Production of intermediate goods was actually up, 0.61%.  As reported yesterday, domestic orders for intermediate goods were up sharply.  The first chart shows the indexes for the four Main Industrial Groups.

More specific information on production is available in the detailed breakdown of production.  Production of machinery and equipment, nec, declined 7.56% from September to October, production of coke and refined petrol products was down 3.86% and motor vehicle production was down 3.27%.  Surprisingly, some of the largest declines were in food, beverages and tobacco, 3.59%, and textiles, 5.04%.  Production of computers and pharmaceuticals were notable exceptions to the October decline.  Computers, electronic and optical products and electric equipment rose 2.25% and basic pharmaceutical products and preparations rose 2.35%.  Total Industrial Production, together with production of machinery and equipment, nec, motor vehicles and pharmaceutical products are shown in the second chart.

Industrial production rarely proceeds in an smooth trend.  The October decline may be only a slight interruption like the July decline that was quickly reversed.  A continuation of the decline in the Euro that started last Thursday would do much to stimulate German production.