Production in the manufacturing sector collapses in July 2024

German industrial production fell significantly in July 2024. The automotive industry and other key sectors in particular recorded sharp declines. Production in the manufacturing sector slumps in July 2024 - major challenges remain for German industry

German industry continues to face major challenges: According to preliminary figures from the Federal Statistical Office (Destatis), production in the manufacturing sector fell by 2.4% in July 2024 compared to the previous month, adjusted for seasonal and calendar effects. Compared to the same month in the previous year, July 2023, calendar-adjusted production even fell by 5.3 %. These developments raise questions about the current economic situation in the industry, which are also of interest to founders and start-ups.

Weakness in the automotive industry as the main cause

The decline in industrial production in July 2024 is primarily due to the significant weakness in the automotive industry. Adjusted for seasonal and calendar effects, production in this sector fell by 8.1% compared to the previous month. In June 2024, the automotive industry had recorded a strong increase of 7.9%, making the slump in the following month all the more pronounced. Other areas of manufacturing were also negatively affected in July: The manufacture of electrical equipment fell by 7.0% and the production of metal products decreased by 3.8%. These sectors play a central role in the German economy and have a significant influence on the overall picture of production trends.

Industrial production declining overall

In July 2024, production in industry - i.e. in the manufacturing sector excluding energy and construction - fell by 3.2% compared to the previous month. The production of capital goods was particularly hard hit with a decline of 4.2 %. Intermediate goods recorded a drop of 2.8%, while the production of consumer goods fell by 1.2%. Energy production was also down in July, falling by 1.9%. Only construction output remained stable, increasing by 0.3%. Compared to July 2023, industrial production was 6.1% lower.

Energy-intensive industries show a mixed picture

The energy-intensive industries recorded a 1.8% decline in production in July 2024 compared to the previous month. In a three-month comparison from May to July 2024, however, production was 0.7% higher than in the previous three months. Compared to the same month last year, production in these energy-intensive sectors even rose by 3.0%. Despite the positive year-on-year development, volatility in these sectors remains high, which could be due to the general uncertainty in the energy supply and the associated costs.

Long-term challenges for the industry

The current production figures illustrate the ongoing difficulties in the German manufacturing industry. In addition to short-term economic fluctuations, long-term structural challenges also play a role. In particular, the strong fluctuations in production in key industrial sectors such as the automotive industry show how sensitively industry reacts to external influences. The combination of rising energy costs, global supply chain problems and the pressure to transform to sustainable production methods continues to put pressure on companies.

For founders and start-ups operating or planning to establish themselves in these markets, this means that thorough market analysis and a flexible business strategy are crucial. However, the uncertainty in industrial production could also present opportunities, especially for innovative business models that focus on sustainability, efficiency improvements and digitalization.