German industrial production dipped 0.4 per cent in March compared to February, down from analyst expectations of 0.6 per cent decline, Reuters reported on Wednesday, citing data from the federal statistics office. Despite being a smaller decline than expected, the news highlights continued challenges for the German economy. This is a reminder that Germany's economic recovery is fragile, noted Franziska Palmas, senior Europe economist at Capital Economics. Palmas expects some improvement throughout the year, but overall activity will likely remain subdued. A brighter spot emerged in the three-month comparison. Production from January to March was 1.0 per cent higher than the previous quarter, indicating a potential stabilisation. This follows a revised February figure of 1.7 per cent growth, down from the initial estimate of 2.1 per cent. The economic downturn seems to have bottomed out, and optimism is returning, said Carsten Brzeski, global head of macro at ING. But a significant recovery, especially in industry, remains a long way off, he added. Weak demand continues to hamper manufacturing. German industrial orders fell 0.4 per cent month-on-month in March, reflecting ongoing concerns. This sentiment was further underscored by an Ifo Institute survey conducted in April, where 39.5 per cent of manufacturers reported a lack of orders, up from 36.9 per cent in January. Energy production also contracted by 4.2 per cent in March. However, construction provided a positive sign with a 1.0 per cent growth in production compared to the previous month.
