Development of output in the goods-producing sector in March 2022

According to the Federal Statistical Office¹, output in the manufacturing sector fell significantly in March compared with the previous month (-3.9%).² Industrial output declined disproportionately (-4.6%), whereas the construction sector recorded a slight increase (+1.1%). Output in the energy sector plummeted by 11.4%. The high prices have led to a significant drop in demand.

After growing for over five months in a row, industrial production has suffered a severe setback, which is mainly due to the Russian war in Ukraine. On the one hand, Germany as an export-oriented country is disproportionately affected by the trade sanctions against Russia. On the other, key intermediate products have also become scarce as a result of the war. The shortage of cable harnesses, for example, has had a negative impact on the automotive sector, where production in March fell by 14.0%. Another key industry, the mechanical engineering sector, also reduced its output substantially, cutting 5.3%. In general, the high prices for electricity, gas and oil are making many production processes more expensive in the short term. In the energy-intensive sector ‘glass, glass products, ceramics, processing of stones and earths’, output declined by 6.7%; in the ‘metal production and metalworking’ sector, it was down by 5.2%.

After being burdened last year by supply bottlenecks for important intermediate goods, industry is now being hampered again by the war in Ukraine and the resulting high prices for raw materials. The outlook is currently influenced by the high level of uncertainty associated with the Russian war in Ukraine.
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[1] Press release by the Federal Statistical Office of 6 May 2022.
[2] All figures are based on preliminary data and are adjusted for price, calendar and seasonal effects (procedure X13 JDemetra+).