According to the data released today by Destatis, production in industry was registered as -1.0% on the previous, despite the market expectations of an increase by 0.5%.





The report published by Destatis also revealed that production in industry excluding energy and construction was down by 0.7%. Production of consumer goods showed a decrease of 3.3% and the production of intermediate goods of 0.2%. The production of capital goods decreased by 0.1%. Outside industry, energy production was up by 6.0%, becoming the only data showing an increase on monthly basis.

After new variants of Covid-19 started to be observed in Europe, quarantine measures implemented by officials were also expanded. English variant and Indian variant of Covid-19, particulary, had a strong impact on these measures. On the other side, Germany started the vaccination process later than its equivalents due to the problems in the supply of vaccines. Afterwards, third wave concerns were raised, leading to serious problems in the supply chain.

In addition to the measures we mentioned above, Ever Given owned by Evergreen company was another issue concerning the supply chain. The ship was stuck in Suez Canal for 2 weeks and made the Canal useless, causing Germany to suffer from the lack of raw materials. After these 2-week-period, there is a global chip problem now. These chips are essential for automobiles, electronical systems, defense systems, and many other technologies. While Germany maintained its producer status in other technological fields, especially in the automotive sector, the global chip problem had a negative impact on Germany's industrial production index. In this direction, coronavirus, shortage of raw materials and the chip problem put pressure on Germany's industrial production in April.

The last but not least, German officials had announced that they fought bravely against Covid-19 and concerns raised for a third wave were relieved now. In addition, fast vaccination process, with which almost 55 million people have been vaccinated for now, led the officials to ease quarantine measures implemented on vaccinated citizens. On the other side, considering the financial and fiscal policies, we believe that production in industry will recover in Germany in the second quarter of 2021.