Industrial production is growing surprisingly - the automotive industry is growing

Production in the manufacturing sector grew by 0.7 percent in September compared to the previous month. The Federal Statistical Office announced this today based on preliminary data. Experts had expected a slight setback for German industry - but this did not materialize.

On average, economists had expected a slight decline of 0.1 percent. Industrial production excluding energy and construction rose by 1.7 percent month-on-month.

Plus in the automotive and pharmaceutical industries

The increase was particularly strong in the automotive industry. Production there rose by 17.1 percent month-on-month. “In this area, production had been at a low level in the previous two months due, among other things, to production changes and factory holidays,” explained the Federal Statistical Office. The strong increase in September is therefore also a countermovement to the weaker summer months.

The pharmaceutical industry also contributed to the positive development - after two weaker months - with an increase of eight percent. However, the decline in construction production had a negative impact. Production also fell in mechanical engineering.

Production growth for August corrected

Looking beyond September, however, the balance is less positive. For the entire third quarter, production in the manufacturing sector was 0.4 percent below the level of the second quarter.

In addition, the Federal Statistical Office corrected production growth for August significantly downwards: instead of the initially reported two percent, it was only one percent according to the new calculations.

According to the authority, the reason for this was supplemented company data from the construction industry. "Since the previous month's value was revised significantly downwards, the positive production growth in September must be put into perspective somewhat," said chief economist Thomas Gitzel from VP Bank.

“Economic recovery is intact”

The scientific director of the Institute for Macroeconomics and Business Cycle Research (IMK), Sebastian Dullien, still sees signs of stabilization. “The increase in industrial production published today shows that the recovery of German industry and thus the German economy is intact,” said Dullien.

The increase in car production shows that the weakness in the summer was largely due to the special situation caused by factory holidays and production changes.

The list of risk factors remains

KfW chief economist Dirk Schumacher also sees indications of a possible improvement in industrial activity in the coming months. However, there is "still a long list of risk factors that could end the industry's upswing before it really gets going." The nervousness of the financial markets regarding the further expansion of the AI ​​infrastructure is just one example of this.

The Federal Ministry of Economics also points to the recently improved mood in industry, high order backlogs and the expiration of special effects that inhibit production. These developments suggest a revival at the end of the year.

At the same time, the recovery remains associated with risks. These included the difficult geopolitical environment and renewed increases in energy prices.