Germany’s automotive sector declines sharply in Q3 – central bank

LONDON (ICIS)–Germany’s “still intact” economic upswing may have come to a temporary halt in the third quarter as a result of a sharp decline in the chemical-intensive automotive sector, as well as a fall in construction output, according to the country’s central bank.

The bank added that rising crude oil prices had also had an impact in economic growth.

Industrial production fell 1.5% on average in July and August, compared to the second quarter, on the back of a 9% drop in automotive sector output due to the switch to new EU-mandated emissions standards.

Output for other industrial sectors remained broadly stable compared to the second quarter, Germany’s Bundesbank added in its latest economic update, but sectors along the automotive supply chain were also hit by the downturn.

August construction sector output fell 1.75% on a seasonally-adjusted basis compared to second-quarter averages, while a sharp climbing in crude oil prices on the back of political instability has driven up food, industrial goods and services prices, the bank said.

Crude pricing rose 8% month on month and 45% year on year in September.

Germany’s manufacturing purchasing manager’s index fell to a 25-month low of 53.7 points in September, according to data from IHS Markit released earlier this month. A reading above 50.0 still shows economic expansion, however.

Bundesbank analysts do not expect the downturn to be protracted, citing recent automotive sector confidence data, and Institute for Economic Research (ifo) surveys of current business outlooks, leading the bank to project a considerable expansion in economic growth for the fourth quarter.

Pictured: Bundesbank’s offices in Frankfurt
Source: Walter G. Allgower/imageBROKER/REX/Shutterstock