The German economy contracted by 0.4 percent year-on-year in the third quarter of 2023 following a 0.1 percent expansion in the previous three-month period, the latest statistics show.
The decline has been largely attributed to the performance of the “manufacture of machinery and equipment” sector. According to the Federal Statistical Office, production in this sector was down 6.3 percent month on month.
By contrast, production in the automotive sector increased and had a slightly positive impact on overall results (+0.7 percent).
In October 2023, production in industry excluding energy and construction was down 0.5 percent from September 2023.
Production of capital goods and intermediate goods also declined by 0.1 percent and 0.4 percent respectively.
Meanwhile, production in energy-intensive industrial branches experienced a drop of 1.4 percent. Economists have been labelling Germany the “sick man of Europe”.
Commenting on the data, Julian Jessop, economics fellow at the Insitute wrote on X, formerly known as Twitter: “Meanwhile, in Germany…the industrial recession continues: output slid another 0.4 percent in October and has now fallen for 5 months in a row…” (sic)
He continued: “This follows another weak set of manufacturing orders data, released yesterday (down 3.7 percent in October and down 4.6 percent on the 3m/3m comparison) and a string of dreadful manufacturing PMIs (the November’s survey was the least pessimistic for six months, but still gloomy).” (sic)
The bleak results coincide with data indicating a broader contraction in the Eurozone economy during the third quarter of the year, with Gross Domestic Product (GDP) decreasing by 0.1 percent.
This marks the first decline in GDP volumes since the final quarter of 2022.
Justin Lowe, currency analyst at ForexLive, said: “Euro area GDP is confirmed to see a marginal contraction in Q3. Looking at the breakdown, household consumption contributed +0.2 percent with government final expenditure contributing +0.1 percent on the quarter.
“This was offset by changes in inventories, which was -0.3 percent, while there were negligible contributions from gross fixed capital formation and external balance.”
Among the bloc’s largest economies, besides Germany, there were also contractions in France (-0.1 percent), and the Netherlands (-0.2 percent), while both Spain and Italy expanded by 0.3 percent and 0.1 percent, respectively.
