German IP Sector Trends All Decay

German capital goods trends continue to turn lower in September as industrial production declines; the losing streak for monthly German industrial production now stretches to four months in a row as output falls at a 7.6% annual rate over 3 months faster than its 6.2% annual rate drop over 6 months which is faster than its 3.9% drop over 12 months.

Broad weakness in output across sectors- The weakness in output at the headline level is echoed by two of the three component sectors and barely violated by one of them. Consumer goods output falls at a 9.6% annual rate over 12 months, falls at a 12.3% pace over 6 months and falls at an extremely weak 23.6% annual rate over 3 months. Capital goods output that manages an increase of 1.2% over 12 months falls at a 3.1% annual over 6 months and then falls at a stepped up 4.1% annual rate over 3 months. Intermediate goods output falls at a 6.1% annual rate over 12 months and falls at nearly the same pace (slightly less, at a 5.7% rate decline) over 6 months but then accelerates to an 8.5% annual rate decline over 3 months. Despite the slight 6-month prevarication, in the trend for intermediate goods deceleration, the signals from industrial output across sectors give a very clear sign of deepening weakness in German manufacturing.

Construction- Construction output goes its own way a bit more, rising by 2.1% in September, falling in August and rising in July. Construction shows no clear trend in output, but output does rise over 12 months and over 3 months.

Mainline reports are weak- The mainline reports of manufacturing output, real-orders, and real-sales, show deterioration and all but real orders are consistent with the notion of secular deterioration at an accelerating pace.

Other indicators’ surveys Surveys show mixed results for changes in values between September and August. However, all surveys show deterioration from 12-months to 6-months and from six months to 3-months based on average data. All surveys are deteriorating on a quarter-to-date basis (that’s with Q3 data now complete).

Selected other Europe The four countries for other Europe that represent early reporters of industrial output show declines across the board in September. All show IP declines over three months as well; only Portugal shows less weakness over 3 months than over 6 months. All also show declines in IP over 12 months. The pace of the year-on-year declines is replicated or worsened over 6 months except in France.

WEAKNESS! What emerges from these considerations is a clear picture of deterioration and generally of worsening growth according to IP and indicators for Germany. Industrial output trends for Portugal, Spain. France, and Norway follow suit. It’s a grim picture for manufacturing in September in Europe.