German industrial production data fell more sharply than expected in March, citing poor performance in the auto sector as one of the reasons, raising fears of a recession in the country this winter.
German industrial production fell 3.4% in March from the previous month after recording a 2.1% increase in February, the German Federal Statistical Office said on Monday, far exceeding analysts' expectations for a 1.3% decline.
Germany's economy ministry acknowledged an unexpected decline in March data after a strong start to the year in manufacturing production.
Statistics Bureau data also pointed out that Germany's March motor vehicle and auto parts manufacturing output fell by 6.5% month-on-month; machinery and equipment production fell by 3.4% in the month; construction industry output fell by 4.6%. In addition, in March, German industrial orders fell by an adjusted 10.7% month-on-month, the largest month-on-month drop since 2020.
A disastrous slump in manufacturing hinted that Germany's first-quarter gross domestic product may be underwhelming, adding to concerns about Germany's economic growth for the rest of the year.
Last year, Germany frequently fell into recession suspicions because of the Russia-Ukraine conflict, and its GDP in the fourth quarter of last year inevitably contracted by 0.5%. Economists have previously warned that Germany's GDP data in the first quarter of this year is still estimated to be difficult to see growth.
Ralph Solveen, chief economist of Commerzbank, said that the German manufacturing industry is getting weaker and weaker due to the global interest rate hike, and the side effects of interest rate hikes are gradually manifesting.
According to Carsten Brzeski, an economist at ING, almost all of Germany’s industrial macro data plummeted in March: retail sales and exports fell sharply. Coupled with the just-released industrial production data, Germany’s GDP growth in the first quarter may be lowered.
In addition, consumers currently prioritize service consumption over commodity consumption, which means that manufacturers have difficulty obtaining new orders and can only rely on the backlog of demand during the epidemic.
Ludovic Subran, chief economist at Allianz, further explained that the second quarter is particularly difficult for the German construction industry, as the backlog of orders is about to run out. The third quarter was very unfriendly to the auto industry, also because existing orders are running out and there are no new orders to replenish. He warned that the market will see a very strong economic deceleration, and Germany is only a microcosm.
Vincent Chaigneau, director of Generali Investment Strategy Research, described another phenomenon of strength in services and weakness in manufacturing, and not just in Germany.
This is true in Europe, he added, and it is true globally. In the best-case scenario, some economies may escape recession, but the economy may still suffer from stagnant growth.
![[ Análisis de SMM ] Una guía visual de los informes semestrales de 2026 de 19 fundiciones de cobre](https://imgqn.smm.cn/usercenter/gCNEi20251217171715.jpeg)
