Goods production surprisingly fell again at the start of the quarter. A 0.4 percent monthly drop was well wide of the market consensus and, following a marginally shallower revised 1.3 percent decrease in September, left output at its lowest level since August 2020, in the midst of Covid. Production has now fallen for five consecutive months and has not increased since April.

Manufacturing fared slightly worse, posting a 0.5 percent monthly drop as capital goods fell 1.0 percent and intermediates 0.4 percent. Machinery and equipment nosedived some 6.3 percent. Elsewhere, consumer goods rose 0.4 percent and energy jumped 7.1 percent but the ailing construction sector declined a further 2.2 percent.

October's setback leaves overall industrial production 1.3 percent below its average level in the third quarter. Consequently, with new orders still trending down, it looks all the more likely that the sector will subtract again from GDP growth this quarter. Recession seems increasingly probable by year-end. However, despite the disappointing October results, at 4, both the German RPI and RPI-P indicate overall economic activity is evolving much as the forecasters anticipated.

Industrial production in October is expected to rebound 0.5 percent following September's 1.4 percent decline. The year-over-year comparison is seen decreasing 2.6 percent following 3.9 percent contraction in September.

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.