Regaining momentum. German industrial production returned as an important growth engine in November, increasing by 1.9% MoM from a 1.2% drop in October. On the year, industrial production is now up by 3.5%. The increase was driven by stronger production of capital goods (+5.1% MoM) and durable consumer goods (+3.7% MoM). Interestingly, both the energy and construction sector saw a second consecutive monthly drop in production.
After a disappointing start of the fourth quarter, today’s industrial production data add further evidence that the German economy has regained momentum towards the end of last year. Looking ahead, the acceleration of the economy should continue. As regards industrial production, order books have increased by more than 7% since January 2013.
At the same time, there has been a significant inventory reduction throughout the year with stocks of finished products currently at an 2-year low. The combination of richly filled order books and low inventories bodes well for industrial production in the coming months. This positive outlook is also reflected in improved recruitment plans. In December, recruitment plans reached their highest level since April 2012, indicating that the industrial sector has returned as a source of future employment growth.
All in all, this week’s data do not only point to a strong end-year finish of the German economy but also bode well for growth in 2014.