German Industrial Production rises well above expectations, boosted by strong jump in car sales

German industrial production rose well above expectations in October – supported by booming car sales- signaling the export-oriented manufacturing sector in the Europe’s largest economy is on track for solid fourth quarter.

Industrial output was up 3.2% in October – in the biggest increase since June – from upwards revised 2.3% previous month and heavily beating forecast for 1.6% expansion.

Production in the car industry – Germany’s biggest industrial sector – rose by nearly 10% in October, providing the biggest contribution to solid October’s figures, along with better than expected industrial orders data, released last Friday.

Relatively strong manufacturing data, despite a partial lockdown imposed to slow the second wave of coronavirus infections, points to good performance of the industry in the final quarter of 2020 that would partially offset negative impact of the lockdown on services sector and improve overall economic picture.

Strong performance in the manufacturing sector is also expected to contribute to less than initially expected decline in German gross domestic product in the fourth quarter, after the GDP grew by 8.5% in Q3, following an unprecedented 9.8% drop in the second quarter.