By Maria Martinez
BERLIN (Reuters) -German industrial output rose in January but exports plunged, showing the challenges facing the incoming government in reviving the euro zone’s largest economy in a time of geopolitical uncertainty.
German exports fell by 2.5% in January compared with the previous month, data from the federal statistics office showed on Monday. The result compared with a forecast 0.5% increase in a Reuters poll.
Imports rose by 1.2% in January compared with the previous month, the data showed.
Germany was last year the only G7 country to post a contraction for two consecutive years. The parties hoping to form Germany’s next government agreed last week to overhaul state borrowing rules to boost defence spending and earmarked 500 billion euros ($541 billion) for infrastructure investments over 10 years.
Their efforts to boost the economy come as a trade war with the U.S. looms, with President Donald Trump threatening tariffs on the European Union.
The foreign trade balance showed a surplus of 16.0 billion euros in January, down from 20.7 billion euros in December 2024, and down from 25.3 billion euros in January 2024.
Exports to EU countries dropped by 4.2% on the month, while exports to countries outside the EU decreased by 0.4%.
Most German exports went to the U.S. in January, although exports were down 4.2% compared with December 2024.
“This still paints a rather unflattering picture of a nation known as an industrial powerhouse,” Carsten Brzeski, global head of macro at ING, said.
INDUSTRY BOTTOMING OUT
Meanwhile, German industrial production rose in January by 2.0% compared with the previous month, the federal statistics office said. Analysts polled by Reuters had predicted a 1.5% rise.
Industrial production in January was above the average for the fourth quarter and this gives hope that it at least will not fall in the first quarter, Commerzbank’s senior economist Ralph Solveen said.
This would also increase the chances that the German economy has picked up again slightly at the start of the year, Solveen added.
Germany’s gross domestic product fell by 0.2% in the fourth quarter compared with the previous three-month period.
After revision of the provisional results, production decreased by 1.5% in December 2024 compared with November, instead of the 2.4% decline previously reported.
Despite the positive figure for January and the upward revision in December data, the less volatile three-month on three-month comparison showed that production from November to January was at the level of the previous three months, showing stagnation in the sector.
German industrial production remains about 10% below its pre-pandemic levels some five years after the onset of Covid-19, Brzeski noted.
Monday’s data confirms the bottoming out of Germany’s industrial slump, he said. “However, it is too early to call any substantial turnaround.”
German industrial orders in January fell by 7% from the previous month.
($1 = 0.9229 euros)
(Reporting by Maria Martinez in Berlin, Paolo Laudani and Anastasiia Kozlova in Gdansk, Editing by Miranda Murray and Ed Osmond)
