Germany's industrial production 2008 - 2019 June

Since 2016 Germany's industrial production growing by 1% p.a. but since 2018 sinking by 1% p.a.

Germany's industrial production is already examined in the Trend Magazine in connection with industrial production in the most important export countries. This report deals with Germany’s industrial since the pre-crisis year 2008 up to the current data of Germany’s Federal Statistical Office.

Update August 22nd, 2019 - The diagram shows the original values of the production index over a period of more than ten years from 2008 to 2019. The dotted line indicates the trend of the last twelve months. This identifies in an easy and transparent way industrial production's direction.

Two phases in the trend of industrial production become visible.

Industrial production of Germany from 2008 to 2019.

Over ten years of industrial production divided into two phases

Industrial production and its trend took eight years from 2008 to the end of 2015 to exceed the pre-crisis level of September 2008 (trend 99.8 index points) in December 2015 (trend 100.0 index points). During this period, production growth in the years 2010/2011 and 2014/2015 remained below the pre-crisis level measured by the average of the last twelve months.

Only at the beginning of 2016 the production growth trend exceeded for the first time the pre-crisis level. Since then this trend growth is 1% per year from January 2016 to June 2019.  

However, since 2018 the trend of Germany's industrial production has been stagnating amid going up and down. In October 2018 the trend growth reached its highest level since the world economic crisis with 106.5 index points. But as the course of the trend line shows, its flat shape is prevailing.

In June 2019, the Federal Statistical Office corrected the production indices for 2019 downwards and together with the low production level in June 2019 (96.5 index points) even the average production over the last twelve months plunged to only 103.7 index points.

This situation led to a decline in the trend of industrial production since initial 2018 of minus 1% p.a.

What will happen in the future?

Stagnation or even crisis of Germany's industrial production likely in 2019

The Trend Magazine stated in February 2019:

  • "It is likely that the growth trend will turn into stagnation in 2019, which could turn into a crisis."  

This has become already apparent with the data of April and May.

The reason for the likely stagnation follows initially from the global economy, which is characterised by a mixture of growth, stagnation and decline. This mix replaced a general economic upturn that formerly followed a crisis. This situation is unstable and the factors for maintaining it continue to weaken. These include the galloping national debt, mounting ever higher risks to continue. This includes industrial production in China, whose growth rates are slowing. This includes the aggressive US policy under Trump and the formation of a new, bipolar power structure in the world with the two major poles, the USA and China. All three factors are narrowing global economy.  

The stagnation of industrial production in Germany in 2019 can also be derived as a thesis from its course to date.  

Since the beginning of the growth phase at the beginning of 2016, production has repeatedly formed higher highs and higher lows - typical of a growth phase.  

But that changed in 2018. Production could no longer surpass the highs of previous years (117.9 index points in November 2017), so it no longer grew faster. Its peak value in 2018 was only 113.3 index points in November 2018. At the same time, the production lows in 2018 were also higher than the lows in the growth phase. The production trend is therefore flattening out - beginning stagnation.

From the situation of the global economy and the course of industrial production to date, we derive the thesis that industrial production is likely to stagnate in 2019.

It remains to be seen how long this stagnation will last. It is highly unlikely that it will be replaced by renewed growth. In the overall economic and political context, it is likely that it will turn into a crisis, i.e. that a new global economic crisis will break out.

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