The Jan numbers for German manufacturing are dismal:
Production is down 23% yoy, and orders 38 %.
Some of the production drop is due to the closure of most car plants in late Dec / early Jan to reduce inventories of unsold cars. So Feb production should be a bit better. But the continuing free-fall of new orders is not encouraging.
How important is manufacturing for the overall economy?
In 2008, it accounted for 1/4 of German output. So if everything else stays stable, and manufacturing drops 20 %, GDP is down 5 %.
But somehow, I can't quite picture manufacturing output to keep contracting at a rate of 20 % for the full year.
If it drops 10-15 %, and the other sectors stay stable, GDP would drop 2.5 - 4 %. That sounds more realistic to me, so I still stick to my forecast of 3-4 % contraction of German GDP.
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