Industrial production again undershot expectations in November. A 0.7 percent monthly drop was well short of the market consensus and the sixth straight decline. The October fall was revised marginally shallower to 0.3 percent but annual growth still declined from minus 3.4 percent to minus 4.9 percent and output now stands at its lowest level since July 2020, in the midst of Covid.

Manufacturing fared almost as bad, posting a 0.5 percent monthly slide as capital goods fell 0.7 percent, intermediates 0.5 percent and consumer goods 0.1 percent. Elsewhere, energy jumped fully 3.1 percent but the ailing construction sector contracted a further 2.9 percent.

November's setback leaves average industrial production in the first two months of the quarter 1.6 percent below its mean level in the July-September period. As things currently stand, December needs a massive 5.1 percent monthly bounce just to keep the fourth quarter flat. Consequently, the sector almost certainly subtracted from GDP growth and probably triggered the arrival of recession in the German economy. To make matters worse, with new orders still trending down, the current quarter is unlikely to be much better. Today's update reduces the German RPI to minus 11 and RPI-P to minus 4, warning that overall economic activity is beginning to fall short of market expectations too.

Industrial production in November is expected to come in unchanged after unexpectedly falling 0.4 percent in October, the fifth straight decline.

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.