The automobile sector pushes German industrial production to growth beyond expectations

The recovery in automobile production gave a larger-than-expected boost to German industrial production during September, according to official data released Friday, in the latest indication that Europe's largest economy is gaining more strength.

Automotive sector production jumped by about 17 percent compared to the previous month, following a period of slowdown that was largely linked to summer vacations and maintenance work in factories during the summer, according to Agence France-Presse.

However, this development represents rare positive news for a sector that has been under intense pressure from intense Chinese competition, declining demand, and rising costs.

This contributed to raising overall industrial production by 0.7 percent during the month, according to data from the German Federal Statistical Office (Destatis), exceeding analysts’ expectations that indicated a much smaller increase.

The Ministry of Economy said that the data “helped compensate for the declines witnessed in industrial production in the middle of the year,” which resulted from several factors, including high energy costs related to the war in the Middle East, and lower water levels in rivers.

The German economy is struggling to emerge from a long period of decline, driven by weak demand for its exports, Chinese competition, and a host of deep-rooted structural problems. But the economy, which has manufacturing as one of its most prominent pillars, is expected to record its fastest growth pace in several years in 2026, largely due to a significant expansion in public spending on defense and infrastructure.

Industrial production data in September also benefited from the performance of the pharmaceutical sector, which recorded growth of 8 percent.

On the other hand, the construction sector and industries producing machinery and equipment witnessed a decline, according to the Destatis office.

Despite the positive data for September, Dirk Schumacher, chief economist at the German development bank KfW, warned of continuing challenges facing the economy.

He said: “There is still a long list of risk factors that may put an end to the recovery of the industrial sector before it actually begins.”

He added: “The state of anxiety in financial markets about the future expansion of artificial intelligence infrastructure is just one example of this.”

Potential investors in Anthropic's upcoming initial public offering have expressed doubts about the artificial intelligence startup's ability to go ahead with its roadshow scheduled for next week, allowing its shares to be listed on the stock exchange in November. According to Reuters, citing informed sources.

Sources familiar with the discussions said that investors are pressing for a more attractive valuation, as some believe that the recently discussed valuation of $1.5 trillion represents the upper limit of expectations.

These discussions reflect, in one way or another, the impact of the sharp selling wave witnessed in technology company stocks over the past year, as well as the state of geopolitical uncertainty that casts a shadow on expectations related to new offerings.

Reuters had previously reported that the promotional tour was initially expected to begin in the week beginning November 9, with the price to be determined the following week.

The sources indicated that Anthropic may have to offer a larger discount to ensure investors make pledges, especially since investors realize the company's need to raise capital in light of the quarterly losses and the large commitments it has made to partners.

Any decision to postpone the rollout is likely to fuel further concerns about the strength of the artificial intelligence sector, at a time when political opposition to data centers and other aspects of artificial intelligence has crystallized, especially after the success of initiatives put to a referendum in several US states aimed at restricting the establishment of data centers.

Amid this, a number of investors remain optimistic about the expansion of the artificial intelligence sector, although the sell-off in assets related to it has negatively affected sentiment over the past month.

European Union countries agreed to postpone the implementation of controversial new rules aimed at reducing methane emissions for one year, ahead of difficult negotiations with the European Parliament.

In an unusual move, the European Parliament voted last month to postpone implementation of the new rules for three years, citing concerns about rising energy prices, going beyond the European Commission's initial proposal that called for a one-year postponement.

Representatives of European Union countries and members of the European Parliament are scheduled to begin negotiations, with the aim of reaching a compromise on the duration of the postponement.

Methane is the second largest source of greenhouse gas emissions causing climate change, after carbon dioxide, according to the European Commission.

European rules aimed at reducing methane emissions in the energy sector have been in effect since 2024.

Some emissions reporting and monitoring obligations are currently scheduled to come into effect from the beginning of 2027, unless the European Parliament and EU member states agree to postpone the new rules.

Under these rules, for some supply contracts, companies will have to prove that producers in the country of origin monitor and document methane emissions according to standards no less stringent than those imposed on companies within the European Union.