German industrial output posts biggest decline in more than three years

Industrial output falls 4.3% month-on-month in August, led by declines in the automotive, pharmaceutical industries, and the manufacture of machinery and equipment

Germany’s industrial production volume in August fell much more sharply than expected due to a steep drop in car manufacturing. This came amid waning demand ahead of the introduction of U.S. tariffs.

The Federal Statistical Office reported on Wednesday that industrial output fell by 4.3% compared with the previous month – the largest decline since March 2022.

According to the statistics office, production volumes in Germany’s largest industrial sector – the automotive industry – dropped by 18.5% from the previous month because of annual plant closures for holidays and production adjustments.

Demand from the United States, Germany’s biggest trading partner, slowed after several months of advance purchases in anticipation of tariffs imposed by President Donald Trump.

“Even if there might be some one-off factors at play, we fear that the sharp drop in industrial production also heavily reflects the end of U.S. frontloading,” said Carsten Brzeski, global head of macro at ING Research.