Germany factory output slumps in July as autos hit the brakes

AI summary

<ul><li>Germany July industrial production -1.1% vs +0.1% m/m expected</li><li>Prior +0.2%; revised to 0.0%</li></ul><p class="text-align-justify" style="text-align: justify;">The breakdownThat's a big miss on estimates as the weak July print was driven heavily by a sharp albeit partly temporary auto-sector slump. That being said, the broader industrial picture was also soft on the month.</p><p class="text-align-justify" style="text-align: justify;">Of note, the auto sector posted a decline of 9.2% m/m - partly due to a multi-week production pause.</p><p class="text-align-justify" style="text-align: justify;">But looking elsewhere, the production of capital goods also fell by 3.4% and consumer goods by 2.2% on the month. To make matters worse, the only lift on the month came from energy production - which rose by 4.7% mainly from stronger wind and solar generation.</p><p class="text-align-justify" style="text-align: justify;">If excluding energy and construction, German industrial production for July recorded a drop of 2.2% on the month. However, it's not all bad as the three-month trend was still slightly positive at +0.4%. So, the July report may indicate weaker data, but not necessarily evidence of a fresh industrial collapse.</p><p class="text-align-justify" style="text-align: justify;">What does this data measure?It measures real output from Germany’s factories, energy sector, construction and mining. It is a key gauge of whether Germany’s industrial economy is expanding