Negative surprises were in abundance in industry in February. Contrary to expectations, industrial production weakened further in December due to a sharp decline in construction activity. The only hopeful sign was the strong rebound in the car industry (+7%). The forward-looking indicators also surprised on the downside. Destatis reported a sharp decline in orders from outside the eurozone, in particular for investment goods (-7.5%). Against this backdrop, the deterioration of the IFO business climate index should not have come as a surprise.
A positive surprise came from the household sector, where consumer confidence turned out to be stronger than expected in February. However, the indicator’s subcomponents tell a very different story. Even though income expectations remained strong, uncertainty with regard to the economy increased sharply and the propensity to buy inched further down.
Index Germany
