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Investing.com -- On Friday, German industrial production data for April revealed a decline of 1.4% from the previous month, surpassing expectations of a 1.0% decrease.
This downturn follows a revised gain of 2.3% in March, initially reported as a 3.0% increase.
The decline in production was widespread across most sectors, with pharmaceuticals experiencing a significant drop of 17.3%, nearly offsetting the 19.3% rise seen in March.
The latest figures suggest that the temporary boost from U.S. tariff front-running is reversing. German exports to the U.S. decreased by 10.3% in April, further underscoring the challenges facing the country’s industrial sector.
Capital Economics, a research firm, expressed concerns about the ongoing impact of U.S. tariffs on German industrial output and the bleak outlook for demand for German goods.
While there are plans to accelerate depreciation of investments in machinery, equipment, and electric vehicles, Capital Economics believes these measures will have a limited effect on production.
The firm anticipates that tariffs will continue to suppress US demand for German industrial products throughout the year.
Additionally, weak economic growth in Europe and China, along with declining competitiveness in sectors such as automotive and energy-intensive industries, are expected to further dampen demand for German industrial goods.
As a result, Capital Economics forecasts that German industrial output will remain subdued in the near term and trend downward over the medium term.