© dpaFILE: Deutsche Bahn
German industrial production
fell more than expected in July, driven mainly by weak activity in the automotive sector, spurring fears that Europe's largest economy could contract again in the third quarter.
Production fell by 2.4% compared with the previous month, the federal statistics office said on Friday. Analysts polled by Reuters had predicted a 0.3% fall.
"Friday's data is a cold shower for everyone hoping for a speedy recovery. In fact,
it suggests that the bottoming out of industry still has a long way to go," said Carsten Brzeski, ING's global head of macro.
The recent weakening of sentiment indicators also suggests that there will be no rapid turnaround for the better, Commerzbank's senior economist Ralph Solveen said.
"There is a growing risk that the German economy will continue to contract slightly in the third quarter," Solveen said.
Production
dropped by 8.1% in the automotive industry, weighing on the overall result. In June, automotive production rose 7.9%.
On a less volatile three month on three month comparison, production in May-July fell 2.7% compared with the February-April period.
"Weakness in German industry is one of the main reasons why we expect the German economy will broadly stagnate in the rest of this year," said Franziska Palmas, senior Europe economist at Capital Economics.
The statistics office revised the figure for June to a 1.7% increase on the month from 1.4% previously.
Despite the upward revision, the slide in July more than reversed June's increase.
"Industrial production is unlikely to come out of recession unless the external picture improves," said Melanie Debono, senior Europe economist at Pantheon Macroeconomics. "The sharp drop in the trade surplus in July, the second in a row, does not suggest this is happening."
The foreign trade balance showed a surplus of 16.8 billion euros in July, down from 20.4 billion euros in June.
German exports rose by 1.7% in July compared with the previous month, while
imports rose by 5.4% on the month.
"The trends in manufacturing, imports and exports still look recessionary, highlighting the risk that the economy is now falling into a technical recession," Debono said.
The German economy contracted in the second quarter, sparking fears of another recession, marked by two consecutive quarters of contraction.
Comment: Meanwhile, either Deutsche Bank's CEO wants to get Germans riled up, or he's dangerously oblivious to the crisis his country is facing; and which is largely due to the weaponised mass migration policy his colleagues in the establishment enforced, as well as the anti-Russia sanctions, and Nord Steam sabotage they backed.
Fortune
reports:
Deutsche Bank CEO urges Germans to work harder to pull the country out of its economic lull
What Germans really need to do is work harder, according to Deutsche Bank CEO Christian Sewing.
"Let's just go back to working as hard as the EU average," he said at a Frankfurt conference on Wednesday, addressing the country's current economic woes, Bloomberg reported.
Germany's largest company, Volkswagen, has dominated the headlines this week after it said it was considering its first-ever factory closures. Separately, Intel, the American tech company, said it was rethinking its new German factory worth $32 billion.
These events are the aftereffect of years of sluggish economic growth, shrinking industrial orders, and historical underinvestment. Adding to the existing tensions, the country might also see political change on the horizon, with the far-right party Alternative for Germany gaining ground in regional elections.
Sewing is right to point out the disparity in EU and German working hours. Official data from 2023 suggest that the bloc's average weekly work time is 36.1 hours, while Germany's is only 34 hours.
Other European countries exceed the regional average, such as Greece, where the workweek lasts 39.8 hours. Workers at Germany's industrial competitor, the U.S., labor for 36.4 hours on average โ closer to the EU average.
Sewing has led the German banking giant since 2018 and has urged policy-level changes in the past to prevent the country from becoming known as "the sick man of Europe." Now, he says, investors are beginning to question the country's ability to fight back.
"Investors have been telling us for more than a year that they doubt Germany's and Europe's ability to perform, and even worse, the will to perform," Sewing said. "We simply have to tell our fellow citizens that we have to do more again."
Representatives at Deutsche Bank didn't immediately return Fortune's request for comment.
Sewing's comments come just months after the Norwegian sovereign wealth fund chief, Nicolai Tangen, pointed out that Americans worked harder and were more ambitious than Europeans. While it's challenging to link working hours to GDP growth, they contribute to economic output and feed into worries about Europe losing its competitiveness with the U.S.
Why is Germany facing a crisis?
Things weren't always this way. During Germany's golden days, it was an industrial powerhouse and the engine driving the EU's growth. Its manufacturing heft could have given any other major economy a run for its money. Germany is also home to some of the biggest companies in the region, such as BMW, Volkswagen, and Siemens.
But its economy has limped through a string of crises in recent years. An energy crisis spurred by Russia's invasion of Ukraine has caused prices to spike, while high interest rates have held back construction activity and hurt local spending power. Germany's largest trade partner, China, hasn't rebounded from COVID-19 as hoped, contributing to its economic plateau and sparking concerns of "deindustrialization."
Other factors that have worsened Germany's condition include stagnant labor productivity, an aging workforce, and government red tape.
The country has also inadvertently fallen behind China in the car-making race it was once leading. Its key automakers initially remained tepid but eventually announced big plans to expand into electric vehicles. They have since retracted those ambitions.
Germany has had a few rude awakenings. For instance, its chemicals behemoth BASF turned to China to make a whopping $10 billion investment in a new facility instead of staying home. One of the concerns the company's then-CEO Martin Brudermรผller cited earlier was that "profitability is no longer anywhere near where it should be." The company also cut thousands of jobs.
An inevitable storm is brewing, but Germany needs to capitalize on its strengths to pull itself out of the bind. It helps that some key economic factors, such as unemployment, are at bay. But there's a long way to go โ and if Sewing's assessment is accurate, maybe it starts with Germans working harder.
"Undoubtedly, Germany's economic contribution is vital to the EU, especially as Europe seeks to quell concerns around weaker growth," Capital Group economist Robert Lind wrote in a note earlier this year.
Whilst no country seems to be immune to the burgeoning global financial collapse, Russia and China continue to report productive economic growth, meanwhile the US and EU seem to be staving off a crash primarily because they're the one's rigging markets and plundering the wealth of others:
Let's start with bringing out the rope, and pulling up at least half of the politicians and bankers on trees and lamp posts. If ththe situation doesn't improve, try the other half ...
But honestly - at least the AfD-electing East Germans have understood that all those establishment figures are always part of the problem, and never of the solution.