German Industrial Production Shrinks; Retail Sales Fall
Germany’s industrial production declined more than expected in August as raw material shortages and supply chain bottlenecks continued to dampen the functioning of many industries, official data showed on Friday.
Retail sales also weakened in August signaling weak contribution to growth from household spending amid rising energy prices.
Industrial output dropped 0.8 percent on a monthly basis in August after remaining flat in July, Destatis said. Production was forecast to ease 0.5 percent.
On a yearly basis, industrial production grew 2.1 percent, reversing a 0.8 percent drop in July.
Excluding energy and construction, industrial production edged down only 0.1 percent month-on-month in August.
Within industry, consumer goods production grew 1.8 percent and capital goods output was up 1.2 percent. By contrast, intermediate goods production fell 2.4 percent.
Destatis said the constraints on the inland waterways transport due to very low water levels weighed on the manufacture of chemicals, coke and refined petroleum products.
In the energy-intensive industrial branches, production decreased 2.1 percent in August. Since February, production in the energy-intensive industrial branches dropped by 8.6 percent.
Outside industry, energy output declined 6.1 percent and production in construction dropped 2.1 percent.
Another report from Destatis showed that retail sales decreased more than expected in August. In real terms, retail sales eased 1.3 percent from July compared to the expected drop of 1.1 percent.
Year-on-year, retail sales eased 4.3 percent, in line with expectations. Retail food sales declined 3.1 percent to the lowest level since January 2017. Non-food sales also weakened in August, down 5.6 percent annually.
In August, import price inflation accelerated to the highest since March 1974 due to the surge in energy prices, Destatis said in a separate communique. Import prices advanced 32.7 percent annually in August, following a 28.9 percent rise in July. This was also faster than the expected 29.9 percent.
Energy imports were 162.4 percent more expensive than in August 2021. Excluding crude oil and mineral oil products, import prices moved up 30.1 percent annually.
Month-on-month, import price inflation rose to 4.3 percent from 1.4 percent. Prices were forecast to climb 2.0 percent.
At the same time, export price inflation came in at 18.6 percent, up from 17.0 percent in July. On a monthly basis, export prices were up 2.1 percent after rising 2.0 percent a month ago.
High energy prices will increasingly weigh on private consumption and industrial production, making a contraction of the economy inevitable, ING economist Carsten Brzeski said. The only question is how severe such a contraction or recession will be.
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