German Industry Hits Unexpected Snag in December

German industrial production saw a sharper-than-anticipated decline of 1.9% in December, interrupting three months of growth. This downturn was primarily driven by an 8.9% decrease in car manufacturing, alongside falls in machinery production. Despite the seasonal impact of Christmas closures potentially affecting output, a broader industrial trough for Europe's largest economy is not expected.

Looking ahead, Germany's industrial sector is poised for a rebound in 2026. Analysts predict that fiscal stimulus measures introduced by the government, coupled with an uptick in factory orders observed in late 2025, will spur manufacturing growth. Furthermore, German goods exports demonstrated robust growth in December, rising 4.0%, with a notable increase in shipments to the U.S., indicating resilience in international trade.