German industrial output rises 0.7% in September on carmaking rebound

September rebound

The gain followed a 1% rise in August, which Destatis revised down from an earlier 2% estimate. From a year earlier, industrial production was up 0.4%.

Automotive production jumped 17.1% from August. Destatis linked part of the increase to plants resuming operations after production changes and summer holidays. The sector had been subdued in the previous two months. Pharmaceutical output rose 8% after two weak months.

Core manufacturing, excluding energy and construction, rose 1.7% on the month. Capital goods output rose 3%, consumer goods 0.8% and intermediate goods 0.1%. Energy production fell 1.2% and construction fell 2.6%. Machinery and equipment output dropped 6.5%, reversing a 5.8% rise in August.

Weak quarter, weak outlook

The September gain did not lift the quarterly total. Industrial production fell 0.4% in the third quarter from the second, Destatis said. Energy-intensive sectors produced 0.8% more in September but remained 1.9% below their output a year earlier, the office said.

The German economy grew 0.2% in the third quarter, Fakti.bg reported, with government investment in infrastructure and defense helping to support activity. Industrial companies still face high production costs, more expensive financing and tougher competition from China.

The Middle East energy shock has halved Germany's 2026 growth forecast, DW reported. Economy Minister Katherina Reiche expects growth of just 0.5% this year, half the pace assumed before the US-Israeli war against Iran began. The January annual report, presented before that war, had expected a slow but steady recovery. Reiche said the war has triggered an energy-price shock beyond Germany's control. She said Germany's growth weakness is mainly structural, and the European Commission ranks Germany at the bottom of Europe's growth tables. Reiche said an increasing number of industrial jobs are being cut and some are moving abroad.

Commerzbank chief economist Jörg Krämer told Reuters that German industry continues to operate at low production levels despite the latest data. KfW economist Dirk Schumacher said the September results were a sign of stabilizing industrial activity, with rising new orders and improving business sentiment creating conditions for stronger growth in the coming months.

Fakti.bg reported that Carsten Brzeski of ING warned the sharp recovery in automotive production may be linked mainly to the end of summer holidays rather than a lasting improvement. ING put Germany's potential growth rate at no more than 0.5% and said the economy is the same size as in 2019. It cited under-investment, slow reform in the 2010s and China's shift from export destination to system rival.