German industrial production falls more than expected in March
By Michele Maatouk
Date: Friday 06 May 2022
(Sharecast News) - German industrial production fell more than expected in March amid supply chain issues, according to figures released on Friday by Destatis.
Production slumped 3.9% on the month following a revised 0.1% increase in February, undershooting expectations of a 1% decline. On the year, industrial output slid 3.5% in March following a revised 3.1% jump the month before.
"Many enterprises still have problems completing their orders because of interruptions in supply chains, which is due to continuing Covid-19 crisis restrictions and the war in Ukraine," Destatis said.
"Just over 80% of the industrial enterprises surveyed complained of bottlenecks and problems in procuring intermediate products and raw materials in March 2022, according to the Ifo Institute for Economic Research. That was almost as many as in December 2021, when a record high of just under 82% had been reached."
Production in industry excluding energy and construction was down 4.6% in seasonally and calendar adjusted terms. Within industry, the production of capital goods fell 6.6%. The production of intermediate goods dropped by 3.8% and the production of consumer goods by 1.5%.
Outside of industry, energy production was down 11.4% on the month in March, following a marked increase in February. Production in construction rose 1.1% on the previous month.
Carsten Brzeski, global head of macro at ING, said: "German industry is clearly suffering from disrupted supply chains on the back of the war in Ukraine and lockdowns in China. Industrial confidence is still close to where it was last spring but production expectations have come down significantly since the start of the war in Ukraine and are now at their historical average.
"Interestingly, production expectations have plunged while order books are still richly filled. The explanation for this discrepancy could very well be that the new lockdowns in China and the war in Ukraine have not only created new supply chain and energy disruptions but also brought back last year's supply chain frictions. Given the highly internationalised production processes in German industry, expect more semi-finished products waiting in Germany for semiconductors or other input materials from Asia."
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