07:24 AM EST, 12/06/2024 (MT Newswires) -- Germany's slump continues with industrial production (IP) falling 1% month-over-month in October from a 2.5% decline in September, said ING.

On the year, IP is down by almost 5%. This is a very weak start to Q4, increasing the risk of a winter recession in Germany, wrote the bank in a note.

German industry has been the best example of the entire economy's problems over the last few years: stuck between cyclical and structural headwinds and coming to terms with the fact that the traditional macro business model of cheap energy and easily accessible large export markets is no longer working, stated ING.

This is why almost five years after the start of the pandemic, German IP is still more than 10% below its pre-pandemic level, pointed out the bank.

Looking ahead, underneath very volatile monthly data, there is a clear bottoming out emerging. At the same time, however, inventory levels are still increasing and have now been at elevated levels for an unprecedented amount of time. As a result, a cyclical rebound in IP could still surprise over the coming months, added ING.

On a less positive note, capacity utilization in manufacturing remains at its lowest level since 2020. It's only in food and apparel production where capacity utilization is currently at historical averages. This isn't exactly a flattering picture for an industrial powerhouse, noted the bank.

A modern and potentially more aggressive version of 'beggar-thy-neighbour' economic policies in the United States could not only harm German exports but also German investments if companies were to relocate production to the U.S., according to the bank.

Add to this latest the political woes for Germany's second most important export partner, France, and the outlook for German industry doesn't exactly look very rosy -- at least not beyond a short-lived cyclical rebound.