German Industrial Production Falls 3.4% on Auto Sector Weakness

It is a relatively quiet day on the European economic calendar. This morning, German industrial production figures were in focus.

Following a tumble in factory orders in March, the production numbers needed to impress to ease concerns about the German economy.

However, German industrial production fell by 3.4% in March versus a forecasted 1.3% decline. In February, industrial production rose by 1.8%.

According to Destatis,

• The manufacture of motor vehicles and parts tumbled by 6.5% in March, reversing a 6.9% jump in April.
• There were also marked declines in the manufacture of machinery & equipment (-3.4%) and the production in construction (-4.6%).
• Production in industry excluding energy and construction fell by 3.3% in March, with the production of capital goods down by 4.4%.
• There were also declines in the production of intermediate goods (-3.5%) and consumer goods (-0.1%).
• However, energy production increased by 0.8%.
• Production in Q1 2023 increased by 2.5% quarter-on-quarter.
• The impact of the Ukraine War on energy prices and energy-intensive industrial sectors remained evident. In March, production fell by 3.3% and was down by 12.9% compared with March 2022.

While the industrial production numbers are from Q1, Germany’s manufacturing PMI survey for April revealed a continued contraction in new orders. Falling pre-production inventories and supplier delivery times supported production. However, contracting new orders and an unwillingness to invest painted a gloomier outlook until there is a pickup in new orders.

EUR/USD Reaction to German Industrial Production

Before the industrial production figures, the EUR/USD fell to an early low of $1.10142 before rising to a pre-stat high of $1.10445.

However, in response to the Industrial Production numbers, the EUR/USD fell to a post-stat low of $1.10374 before rising to a high of $1.10416.

This morning, the EUR/USD was up 0.18% to $1.10390.

Up Next

While the German industrial production numbers drew interest, investors should monitor ECB member commentary. ECB Chief Economist Philip Lane is on the calendar to speak today. Investors should also monitor ECB member chatter with the media.

Looking ahead to the US session, it is a quiet day on the US economic calendar. There are no US economic indicators for investors to consider.

A lack of stats leaves Fed chatter to move the dial ahead of the US CPI Report mid-week.

Beyond the economic calendar, the banking sector, the US debt ceiling, and corporate earnings also need consideration.