Germany’s industrial production fell by 1.4% in April compared to the previous month, exceeding economists’ expectations of a 1.0% decline, according to official data released Friday.
The drop followed a revised 2.3% gain in March, down from an initial estimate of 3.0%. The decline was broad-based, with pharmaceutical output plunging 17.3%, nearly negating the 19.3% surge recorded in March.
The data suggests that the temporary boost driven by preemptive U.S. orders ahead of tariffs is fading. In line with this, German exports to the U.S. dropped 10.3% in April, highlighting growing pressures on the country’s industrial base.
Analysts at Capital Economics expressed concern that ongoing U.S. tariffs are weighing heavily on German industry, and the outlook for global demand for German-made goods remains weak.
While the German government is exploring accelerated depreciation incentives for investments in machinery, equipment, and electric vehicles, Capital Economics believes such measures are unlikely to significantly boost output.
The firm expects that U.S. trade restrictions will continue to dampen demand for German industrial exports throughout the year. Broader challenges—including sluggish growth in Europe and China, and declining competitiveness in key sectors such as automotive and energy-intensive manufacturing—are also seen as persistent headwinds.
Given these factors, Capital Economics forecasts that Germany’s industrial production will remain weak in the near term and continue to trend downward over the medium term.
