Goods production fell for a fourth time in as many months in August. A 0.2 percent monthly drop was the shallowest of the sequence and followed a smaller revised 0.6 percent slide in July but was still slightly steeper than the market consensus. Positive base effects meant that annual growth rose from minus 2.0 percent to minus 1.7 percent but output now stands at its lowest level since last December and some 7.4 percent below its pre-pandemic level in February 2020.

However, manufacturing fared rather better, posting a much-needed 0.5 percent increase versus July as capital goods rose 1.3 percent. Intermediates (0.5 percent) also made headway but consumer goods dropped a further 1.4 percent. Elsewhere, construction was down 2.4 percent and energy 6.6 percent.

The latest setback means that overall industrial production is almost certain to subtract from third quarter GDP growth ignoring revisions, September will need a 5.4 percent monthly gain just to hold the quarter flat. Orders have shown some signs of stabilising recently but the near-term outlook for the sector remains grim. That said, today's update puts both the German RPI and RPI-P at 1, indicating that at least economic activity in general is performing much as expected.

After three straight declines for the first time since April-June 2021, industrial production in August is expected to fall further but only marginally, by 0.1 percent. The year-over-year comparison is seen falling 1.6 percent following July's 2.2 percent decrease.

Industrial production measures the physical output of the nation's factories, mines and utilities. Data are collected from companies in the sector with fifty or more employees and include mining and quarrying, manufacturing, energy and, in contrast to its Eurozone counterpart, construction.

Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that will not lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios.

Like the manufacturing orders data, the production index has the advantage of being available in a timely manner giving a more current view of business activity. Those responding to the data collection survey account for about 80 percent of total industrial production. Like the PPI and the orders data, construction is excluded.

This report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Are manufacturers still producing construction supplies and other materials? This detailed report shows which sectors of the economy are growing and which are not.