OPINION
Market Rating Before FOMC MeetingJan 31
German Industry: Still Worse than it was Before the Pandemic
According to data released today by Destatis, production in industry in Germany has increased by 2.7 percent (seasonally and calendar adjusted) on monthly basis. It also grew by 1.8 percent year-over-year. It was expected to be registered as 1.19 percent MoM and minus 0.39 percent YoY.
Compared with February 2020, the month before restrictions were imposed due to the corona pandemic in Germany, production in January 2022 was 3.0 percent lower in seasonally and calendar adjusted terms, according to Destatis. Production in industry excluding energy and construction was up by 1.3 percent in seasonally and calendar adjusted terms in January 2022. Within industry, the production of consumer goods was up by 4.0 percent and capital goods by 1.2 percent. Outside of industry, energy production decreased by 0.1 percent in January on the previous month and production in construction rose by 10.1 percent.
Global supply bottlenecks resulting from the pandemic have been putting pressure on German industry for about a year. The damage inflicted on production chains by creating cost pressure, especially due to the rise in energy prices, is a major obstacle for production in industry to reach levels before pandemic.
In February, prices of energies, especially crude oil and natural gas, rose aggressively in international markets, due to the Russian invasion of Ukraine. Besides that, weak performance of euro may lead to a contraction in production in industry again. However, if German government decides to activate an incentive package for German companies, this contraction is likely to be prevented.
Investors’ stress levels are still high in Europe (VSTOXX: 48.24), EURUSD currency pair is moving between 1.0846 and 1.0932 levels. Opening the day at 12 647, DAX40 had declined to 12 468 and recovered to 13 100 afterwards.
Compared with February 2020, the month before restrictions were imposed due to the corona pandemic in Germany, production in January 2022 was 3.0 percent lower in seasonally and calendar adjusted terms, according to Destatis. Production in industry excluding energy and construction was up by 1.3 percent in seasonally and calendar adjusted terms in January 2022. Within industry, the production of consumer goods was up by 4.0 percent and capital goods by 1.2 percent. Outside of industry, energy production decreased by 0.1 percent in January on the previous month and production in construction rose by 10.1 percent.
Global supply bottlenecks resulting from the pandemic have been putting pressure on German industry for about a year. The damage inflicted on production chains by creating cost pressure, especially due to the rise in energy prices, is a major obstacle for production in industry to reach levels before pandemic.
In February, prices of energies, especially crude oil and natural gas, rose aggressively in international markets, due to the Russian invasion of Ukraine. Besides that, weak performance of euro may lead to a contraction in production in industry again. However, if German government decides to activate an incentive package for German companies, this contraction is likely to be prevented.
Investors’ stress levels are still high in Europe (VSTOXX: 48.24), EURUSD currency pair is moving between 1.0846 and 1.0932 levels. Opening the day at 12 647, DAX40 had declined to 12 468 and recovered to 13 100 afterwards.
