Industrial production soars in Europe's largest economy

At the end of August, industrial production in Germany increased by 2 percent, although analysts, after a fall of 1.2 percent in July, expected growth of only 0.5 percent. Reuters reports this with reference to official data.

The unexpectedly good performance was not hampered even by unstable energy prices and disruptions in shipping due to low water levels in the Rhine.

The last time German industry showed higher growth was in March 2025. The figures are largely due to increased activity in the construction sector (plus 9.3 percent) and mechanical engineering. The production of machinery and equipment increased by 5.3 percent, but the automotive industry recorded a decline of 5.4 percent.

The latter factor is explained by a greater number of seasonal production stoppages than a year earlier, so in September analysts expect the industry to catch up.

Adjusted for calendar factors, compared to August 2025, total industrial production increased by 2.3 percent.

KfW economist Sebastian Wanke noted that digitalization has finally begun to support the country's industrial sector. The industry is also benefiting from rising defense spending. VP Bank chief economist Thomas Gietzel suggested that with these results, German GDP growth in 2026 could exceed one percent.