German industry reels from anti-Russian sanctions

Production decline in March exceeded analysts’ expectations

German industrial production dropped more than expected in March, data released on Friday by the country’s statistics office shows. According to Destatis, Covid-related supply chain issues have been exacerbated by the conflict in Ukraine.

Production slid by 3.9% last month following a 0.1% increase in February, far outstripping expectations of a one-percent decline. On an annual basis, industrial output slumped by 3.5% in March following a 3.1% jump the month before.

Manufacturing production lost 4.6% in March and energy production was down 11.4%, while construction output gained 1.1%, according to the data. On Thursday, it was reported that manufacturing orders logged a 4.7% month-on-month decline in March.

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A worker cleans a steel pan at the steel plant in Germany. © AFP / Morris Mac Matzen
German industries struggling to replace Russian imports – poll

The largest drop was recorded for capital goods, used by businesses in production, which tumbled by 8.3%.

“In these politically and economically difficult times, the decrease also shows a growing reluctance to invest,” the statistics office said in a statement.

Foreign orders from outside the eurozone nosedived 13.2% in March, while demand from inside the area strengthened by 5.6%. Domestic orders edged down by 1.8%.

“Many enterprises still have problems completing their orders because of interruptions in supply chains, which is due to continuing Covid-19 crisis restrictions and the war in Ukraine,” Destatis said.

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