Significantly, exports slid by 1.7% in September, while imports rose by 2.1%, reflecting signs of improved domestic demand.
Industrial Production Falls but Factory Orders Rise
Industrial production figures from Germany presented a gloomy end to the third quarter, falling by 2.5% (in the previous month: +2.9%). Economists had expected production to decline by 1%.
German Economic Indicators Send Recession Signals
The industrial production and trade data reinforced expectations of a 0.2% annual economic contraction in 2024. However, September’s factory orders and October’s Manufacturing PMI offered a glimmer of hope, suggesting a potential bottoming out in the German economy.
The HCOB Manufacturing PMI increased from 40.6 in September to 43.0 in October. While manufacturing remained in contraction territory (below 50) in Q4 2024, declines in new orders slowed sharply, aligning with September’s 4.2% jump in factory orders.
Potential Setback: US Tariff Threat Following Trump’s Election
However, hopes for a sustained recovery could be short-lived following Donald Trump’s victory in the US presidential election. On the campaign trail, Trump pledged to impose tariffs on EU goods, potentially starting a trade war, which may weigh heavily on the German economy.
Daniel Kral, a Europe macro specialist at Oxford Economics, commented,
