German factory output rose 1.8% in October, beating expectations. First back-to-back production increase since early 2024.
Germany’s industrial sector delivered an unexpected boost in October, raising hopes that the struggling economy might finally be stabilising.
Fresh data from Destatis, released on Monday, showed industrial production rising 1.8% from the previous month, a sharp contrast to analysts’ expectations of a decline.
This follows a 1.1% rise in September, marking the first two-month streak of growth since early 2024.
ING economist Carsten Brzeski said the back-to-back increase could signal that the worst phase is over.
“The second consecutive monthly increase suggests that industrial production has finally reached a period of bottoming out,” he noted.
However, Germany’s economy ministry urged caution, saying domestic demand is improving, but foreign orders remain weak.
Despite the recent progress, it warned that “no noticeable upturn” is expected before the year ends.
Destatis highlighted several key shifts in October: Construction output jumped 3.3%, Machinery and equipment production climbed 2.8%, but the troubled automotive sector slipped 1.3%, continuing its downward trend.
October’s production bump follows a strong rise in industrial orders, driven heavily by demand for defence goods as Germany accelerates its rearmament efforts.
Chancellor Friedrich Merz has boosted national spending on defence and infrastructure to lift the economy out of its two-year recession.
Critics say the rollout is slow, but the government insists the plan will take effect over time.
Berlin expects only 0.2% economic growth in 2025, with stronger momentum expected in 2026 as major public investments begin to filter through the economy.
