Despite higher output, Germany’s industry is still “in the woods.”

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In a rare indication of manufacturing resilience, German industrial output increased more than predicted in October, but analysts cautioned that supply constraints for raw materials and intermediate goods would continue to stymie production in Europe’s largest economy.

After a revised 0.5 percent fall in September, industrial output increased by 2.8 percent in October, according to the Federal Statistics Office.

According to a survey, the economy grew by 0.8 percent in October. However, overall output was still 6.5 percent lower in February 2020 than in February 2019, the month before pandemic limitations were implemented.

“Despite the good production figures in October, German industry is not out of the woods yet,” said Commerzbank (DE:CBKG) chief economist Joerg Kraemer.

Nearly three-quarters of businesses still complain about material shortages impeding output, according to Kraemer, who said that fresh plant and port closures in China due to coronavirus outbreaks could ensure the problem will persist.

According to the statistics office, the automobile industry increased production by 12.6 percent in October, helping to enhance overall output, according to Kraemer.

Due to severe bottlenecks, the automobile sector is sitting on swelling order books and has been unable to process orders.

“Despite yesterday’s slump in new orders, the orders are certainly there to strongly expand production over a longer period of time,” said the LBBW’s Jens-Oliver Niklasch.

Story by : Norvisi Mawunyegah