Industrial production in Germany continues to remain weak

In contrast to the rapidly expanding service sector, industrial production in Germany continues to remain deep in the contraction zone. This is shown by the latest survey results on the IHS Markit / BME Purchasing Manager Index (EMI) for the month of April: At 44.4 points, the important leading indicator for the manufacturing sector in Germany improved slightly compared to March (44.1) ; Nevertheless, the PMI is below the growth threshold of 50.0 points for the fourth month in a row, according to the English financial services provider IHS Markit.

"Despite once again mixed EMI data, we are confident that the German industrial sector will soon pick up again. Where the journey will ultimately be in 2019, however, will be the figures of the next preliminary estimate at the end of May, "Dr. Silvius Grobosch, Managing Director of the Federal Association of Materials Management, Purchasing and Logistics e.V. (BME) on Monday in Eschborn.

"The mood in Germany is good - at least among consumers and in the construction sector. Things are different in the industry at the moment, even though the latest EMI was slightly higher than in the previous month, "commented Dr. Gertrud R. Traud, chief economist of Helaba Landesbank Hessen-Thüringen, on Monday at BME request the current EMI data. The manufacturing industry is currently showing particularly weak. In particular, the automotive sector is responsible for this. This shows how quickly a strength could become a weakness. "But there is a glimmer of hope. The strong economic stimulus in China, continued growth in the US and signs of recovery in our immediate neighbors with continued strong demand in the service sectors should also soon give German industry a boost, "the Helaba Bank Director finally announced to the BME.

"The latest data shows once again the problems of German industry, which ultimately weigh on the economy as a whole. This is a general industrial weakness in the global economy, as well as the well-known problems from the still unresolved Brexit to the special issues of the automotive industry, "said Drs. Ulrich Kater, chief economist of DekaBank, on Monday the BME. In his view, however, it does not look that bad: The hard data indicated that the domestic economy was buoyant, with intact growth in the first and second quarters. Thus, one or the other pessimist must probably correct his growth forecast for this year up again.

"The industry continues to lose strength. The renewed decline in incoming orders creates uncertainty among companies about their future business, "said DIHK foreign trade expert Kevin Heidenreich on Monday the BME. Added to this would be international trade disputes and Brexit. "Better sooner than too late, therefore, companies must be relieved of excessive taxes and too much bureaucracy. This will support the economy and help businesses on a global scale, "added the head of the DIHK Unit on Foreign Trade and Development Policy.

On the recent development of the EMI sub-index purchase prices, Dr. Ing. Heinz-Jürgen Büchner, Managing Director of Industrials, Automotive & Services at IKB Deutsche Industriebank AG, told BME on Monday: "Crude oil prices are currently causing high volatility. Already at the beginning of April, prices had risen slightly. The announcement by the US not to renew the Iranian crude oil permits issued until May 2019 has led to a sharp rise in crude oil prices. "The situation eased somewhat after President Trump announced that Saudi Arabia would be ready to close the gap in the short term shut down. The reference embargo is particularly affecting China, India, Turkey and South Korea. "For its part, the Iranian government recently threatened to block the Strait of Hormuz, the main shipping route from the Gulf region. Against the background of the currently continuing decline in crude oil production in Venezuela - which is only around one third of the level of 2017 - this would jeopardize the oil supply, "added Büchner. However, as Saudi Arabia is currently dependent on the goodwill of the USA, IKB expects that the current funding restriction of OPEC will be lifted by June at the latest. As a result, crude oil prices between 70 and 75 US dollars per barrel of Brent are expected by the middle of 2019. In the case of a temporary closure of the Strait of Hormuz, the price of crude oil would in the short term have further potential for growth.

Source: Bundesverband Materialwirtschaft, Einkauf und Logistik e.V. (BME), Photo: Fotolia