German industrial production increased by 0.7% MoM in November, from a 1.7% drop in October. On the year, industrial production is still down by 8%. The increase in industrial production was spread widely across sectors. Durable consumer goods recorded the strongest increase with 2.5% MoM.
After a temporary halt in October, German industrial production has picked up steam again. Looking ahead, the current momentum should continue. The inventory cycle is still turning and German manufacturing should continue to benefit from an investment-led global recovery. Of course, it will be hard to match the growth rates of industrial production in recent months. These were due to the initial rebound. Now, the industrial sector is entering a period of more normal growth rates. The upside of this development is that every single month with positive news from the industry adds to the hope that further job losses should be limited
The last two days have again laid bare the strengths and weaknesses of the German economy. Exports and industrial production are powering ahead. This should not only result in a very strong fourth quarter but should also continue the recovery this year. At the same time, private consumption stays behind and disappoints. Rebalancing the economy towards more domestic driven growth looks differently. If this is the best, in terms of economic growth, the Eurozone has to offer this year, there is obviously no need for the ECB to be in rush with rate hikes.