Industrial production in Germany is recovering very slowly

by David Fleschen

Manufacturing in Germany ended the year 2019 in the deep red area. Only the new orders were a positive ray of hope, said the English financial service provider IHS Markit in London. These did not shrink as slightly as before throughout the year. The business outlook also improved - albeit only minimally.

The seasonally adjusted IHS Markit / BME Purchasing Managers' Index (EMI) fell slightly to 43.7 points in December 2019 after the five-month high of 44.1 in November. The current value is below the average of the shrinkage phase that started in January 2019. The decline continued in all three main areas of industry, with capital goods manufacturers performing worst, followed by wholesale goods manufacturers. Only in the consumer goods area did the contraction rate weaken somewhat.

"According to the latest EMI December data, the hoped-for turnaround in industrial production is still a long time coming. However, we are hopeful that the business prospects of manufacturing companies have recently brightened, ”emphasized BME general manager Dr. Silvius Grobosch on Tuesday in Eschborn.

“2019 was not a good year for German industry. The first signs of recovery are beginning to appear, but only very gradually, ”commented Dr. Gertrud R. Traud, chief economist at Helaba Landesbank Hessen-Thüringen, receives the latest EMI data on Tuesday at the request of the BME. Nevertheless, the prospects for 2020 are much better. An end to the Brexit drama is in sight and the US and China are obviously planning a trade agreement. To what extent there are actual tariff reductions is not yet certain. "However, US President Donald Trump has to come up with positive data later this year for his election chances to increase. German industry should then also benefit from this, ”added the Helaba bank director.

“The old year does not really end on a conciliatory note for German companies. German industry is not yet over the hill. Fortunately, the downswing is easing somewhat and the domestic economy remains strong, ”said Dr. Ulrich Kater, chief economist at DekaBank, told the BME on Tuesday.

"Even in the reverberation of 2019, German industry continues to write many numbers with red pencil. Production, employment and prices are still falling, ”Katharina Huhn, head of the Economic, Growth and Business Survey at DIHK, told the BME on Tuesday. However, the decline in new orders is slowing and there is hope for stabilization. An expansion of the industrial recession to service providers and the construction industry is therefore unlikely. "Together with the prospect of an economic recovery, the business outlook improves for the second time in a row, if only slightly," emphasized the DIHK economic expert in her statement for the BME.

On the recent development of the EMI sub-index purchase prices, Dr. Heinz-Jürgen Büchner, Managing Director Industrials, Automotive & Services at IKB Deutsche Industriebank AG, told the BME on Tuesday: "Despite the good supply situation, the current escalation in the Middle East conflict can very quickly lead to an increase in crude oil prices of up to $ 80 lead per barrel of Brent. If the funding opportunities for a large deposit fail, even higher prices are possible. However, as a result of the feared negative effects on the global economy, this then induces price declines for listed industrial raw materials. This would compensate for the prices, some of which have been rising since December 2019 - for scrap, for example.”

Source: BME, Photo: Fotolia

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