German Industrial Production Plunges Again

Summary

• Industrial production plunged again, ending the year 2023 at some 10% below pre-pandemic levels, but we are seeing the very first signs of light at the end of a long tunnel.
• The sharp drop in both exports and imports, as well as today’s industrial production, not only illustrates the weakness of the German economy’s backbone but also increases the risk of a downward revision of fourth quarter GDP growth.
• German industry remains stuck between cyclical and structural weakness, but the recent increase in industrial orders brought at least some vague light at the end of what increasingly looks like a very long tunnel.

Vithun Khamsong/Moment via Getty Images

By Carsten Brzeski

German industry remains stuck between cyclical and structural weakness. Industrial production dropped by 1.6% month-on-month in December from -0.2% MoM in November. On the year, industrial production was down by 3% and is now some 10% below its pre-pandemic level. Production