Bankinter | Industrial production in September was once again weaker than expected, falling by 1.0% year-on-year, compared to an estimated rise of 0.1% and a 3.9% drop previously. In month-on-month terms, it rebounded by 1.3% versus 3.0% expected and after the sharp fall seen in August (4.3%), which was the largest since 2022, mainly due to the18.5% fall in car production.
Analysis team’s view: Negative data, although we do not expect an impact on the market. The German industrial sector remains mired in a structural recession. It should be remembered that German industrial production remains 15% below pre-pandemic levels and the October Manufacturing PMI published on Monday continues to show no signs of recovery. This is mainly due to: high post-Ukraine energy prices (2-3x higher than in the US) and weak exports (80% of industrial production) due to competition from China and US tariffs. In addition, stagnant domestic consumption is not helping, with one of the highest savings rates in Europe (11.5% vs 9% EMU).
We expect to see some recovery in the medium term thanks to: i) fiscal stimuli, such as aid to industry to reduce its energy costs from January 2026 onwards, and ii) a sharp increase in defence investment over the coming quarters.
