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German Industrial Production Falls, Euro Struggles

According to data released by the Federal Statistical Office of Germany, industrial production dropped by 4% in August (month-on-month), higher than expectations of 0.4% and July’s 1.3%.

In annual terms, industrial production rose by 1.7 lower than expectations of 11.4% and the previous month's 6%.

It was reported that the production of capital goods dropped by 7.8%, followed by a fall in the production of consumer goods by 2.6% and a drop in the production of intermediate goods by 2.4%. Similarly, production in the construction sector dropped by 3.1%. In contrast, energy production increased by 4.1%.

German producers have been claiming that production is being constrained by supply chain disruptions.

Germany’s Ministry of the Economy recently reported that factory orders fell by 7.7% in August (month-on-month), given a drop in demand from countries outside the Eurozone. Orders from inside Germany dropped by 5.2%, while orders from countries outside the Eurozone fell by 15.2%. In contrast, orders from Eurozone countries increased by 1.6%.

Todays disappointment has also an upside: it brings some relief to German manufacturers who are increasingly suffering from high backlogs,” commented an analyst at ING. Judging from still richly filled order books and low inventories, the future for industrial production should be extremely bright if it wasnt for the ongoing supply chain frictions.”

Germany continues struggling with the spread of the COVID-19 virus. Since the beginning of the pandemic, 4,284,354 COVID-19 cases have been reported in Germany, including 94,499 related deaths.

To stop the spread of the virus and avoid more deaths, the government is currently advancing a very ambitious vaccination campaign. So far, 109 million doses have been distributed among the local population, with 54 million now fully vaccinated, accounting for 64.9% of the total population.

Since the beginning of the week, the euro has lost 0.29% against the US dollar, losing ground for the fifth consecutive week. During yesterday's session, the euro dropped by 0.34% against the greenback, closing at the 1.1556 level and losing ground for the second consecutive day.

By 10:45 GMT, the euro fell by 0.01% against the US dollar, hitting the 1.1558 level.

Ibeth Rivero
About Ibeth Rivero

Ibeth contributes daily market commentary in both English and Spanish (both of which she speaks fluently) and she also manages the DailyForex mobile app to ensure that traders around the world are getting important market updates in real time.


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