German industrial production leaps after Brexit slump

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FRANKFURT: Industrial production in Germany, Europe’s biggest economy, rebounded powerfully in August after a post-Brexit tumble in July, official data showed on Friday.

Production in August was 2.5 percent higher than the previous month, corrected for price, seasonal, and calendar effects, the federal statistics office Destatis said.

Analysts surveyed by Factset had predicted an increase of just 1.0 percent.

Industrial firms drove the increase, growing by 3.3 percent overall, while energy saw a slight gain of 1.1 percent and construction fell by 1.2 percent.


Looking more closely at industry, there was a 1.6 percent increase in producer goods, a 4.7 percent increase in capital goods, and a 3.3 percent increase in consumer goods.

“Overall the results back up a still-restrained increase in production for now,” the Economy Ministry in Berlin said in a statement.

Comparing July and August together against the second quarter showed only a small increase in production of 0.2 percent, it noted — while adding that the results could indicate “a slight revival in the remainder of the year.”
On Thursday, official figures showed that industrial orders in August grew faster than forecast, increasing 1.0 percent over July.

The results suggest “the initial Brexit shock has been digested” in the wake of Britain’s June 23 vote to quit the EU, analyst Carsten Brzeski at ING Diba bank said. “The outlook for the third quarter all of a sudden looks much brighter”.

But slow wage growth and much smaller flows of refugees into Germany—cutting growth in government spending—will likely weigh on consumption in the coming months, he added, with a knock-on effect on industry.

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