German industrial production unexpectedly falls, exports tick higher

7th Jun 2024 07:07

(Sharecast News) - German exports pushed higher in April, official data showed on Friday, but industrial production continued to disappoint.

According to Destatis, the Federal Statistics Office, German exports rose 1.6% on the previous month. Imports sparked 2%.

Year-on-year, exports rose 1.9% while imports fell 0.6%.

As a result, the seasonally-adjusted trade balance showed a surplus of €22.1bn in April, compared to €22.2bn in March and €18.7bn in April 2023.

However, separate figures also released by Destatis on Friday showed industrial production fell 0.1% month-on-month in April, from -0.4% in March. Year-on-year, it fell 3.9%. Analysts had been expecting a slight rise of 0.3% month-on-month.

The drop was largely driven by intermediate goods and ongoing weakness in the country's construction sector. Construction output fell 2.1% in April, partially offsetting a 4.2% increase in the automotive industry.

Germany's economy - Europe's largest - is heavily reliant on manufacturing and has been hit hard by surging energy costs, inflation and weak global demand.

Carsten Brzeski, global head of macro at ING, said: "Looking ahead, the Germany economy should still gain more momentum. Strong wage growth should fuel a cautious recovery in private consumption, and even the inventory cycle should gradually start to turn positive.

"However, this turning of the inventory cycle has not yet happened.

"After all the optimism of the last weeks, the economy's official start to the second quarter was disappointing. Private consumption remains weak and industrial production is simply not gaining momentum. It is again exports that are the main growth driver.

"For now, it's too early to already say goodbye to optimism again, but it is very clear that the recovery of the German economy will remain tenacious."