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Germany and France Face Industrial Production Declines Amid Auto Sector Struggles

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Discover the latest insights into Germany and France's industrial output declines, particularly in the automotive sector, and the implications for foreign trade and manufacturing.

Germany's industrial output has declined significantly by 2.4% in July, driven primarily by a staggering 8.1% drop in the automotive sector, according to the Federal Statistical Office. This decline comes as a surprise to analysts who had anticipated only a 0.3% decrease. The automotive industry, which had seen a rebound of 7.9% in June, is now grappling with reduced demand for cars, particularly electric vehicles, and fierce competition from China. In response, Germany's largest labor union is exploring options such as a four-day work week as Volkswagen contemplates factory closures and the end of its job security program.

Foreign Trade Dynamics

Despite the downturn in industrial output, Germany experienced a recovery in foreign trade. The Federal Statistics Office reported a 1.7% increase in exports for July, amounting to 130 billion euros, following two months of declines. However, year-on-year comparisons show a 1.2% drop in exports. Imports surged by 5.4% to 113.2 billion euros, resulting in a trade surplus of 16.8 billion euros for the month, although this is a decrease from the previous month's surplus of 20.4 billion euros. Notably, German exporters have faced significant challenges in markets like China and the United States, while trade within the European Union has seen some improvement.

France's Industrial Setback

In France, the industrial landscape is similarly troubled, with production falling by 0.5% in July, as reported by INSEE. This decline follows a modest rebound of 0.8% in June. The manufacturing sector, which constitutes about 82% of industrial production, saw widespread declines, particularly in transport equipment, which dropped by 4.9%. The automobile sector specifically faced a 4.6% decrease. Over the last three months, industrial production in France has decreased by 2.3%, heavily influenced by a dramatic 17.8% drop in the automobile industry. Furthermore, energy-intensive sectors are struggling with high production costs due to soaring electricity and gas prices, raising concerns about their future output.

Clam Reports
Refs: | Le Figaro | Aljazeera |

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