Market Overview

German industrial production slide brings closer ECB’s rate cut  

German industrial production continues to decline. The rate of contraction in March was slightly better than the average forecasts but maintained the downward trend. 

The index of industrial production fell by 0.4% in March and by 3.3% y/y, having lost in annual terms for the last ten months. 

German industrial production peaked at the end of 2017, and then it was turned down by trade wars, pandemic lockdowns, and the most recent impulse of deglobalisation. Here, you can discern both a cooling of relations with the second-biggest economy and a general slowdown. 

Germany’s industrial orders index, published a day earlier, fell in March to its lowest level since 2013, barring a sharp dip during the pandemic lockdowns. 

Weakness in Germany’s industrial sector could bring a rate cut from the ECB closer, softening the Bundesbank’s traditionally hawkish bias. 

The FxPro Analyst Team

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