Looking ahead, leading indicators for October do not bode well for future production. After a first stabilization in September, production expectations and survey-based order book assessments weakened again in October. Inventories have started to come down a bit, but are still too high. Yesterday’s September industrial orders data confirmed the weak outlook. Everything seems to indicate that German industrial production will continue to move sideways instead of gaining momentum in the short term.
Based on today’s data, industrial production would need to increase by at least 2% month-on-month in the coming months for production to return to positive territory in the fourth quarter. Although there is still no concrete data for the fourth quarter, recent events have clearly increased the risk that the German economy will end the year in recession.