Germany’s industrial output shrank 0.7% month-on-month in March 2026, following a downwardly revised 0.5% decline in the previous month and missing market expectations for a 0.5% increase. The drop was mainly driven by weaker energy production (-4.0%) and a decline in mechanical engineering output (-2.7%). In contrast, activity improved in construction (1.9%) and the automotive industry (1.9%). Excluding energy and construction, industrial production declined 0.9%, reflecting lower output of capital goods (-1.6%) and consumer goods (-1.9%), while intermediate goods production rose 0.8%. On a less volatile three-month basis, industrial activity contracted 1.2% in the January–March period compared with the previous three months. On an annual basis, industrial production dropped 2.8%, sharply worsening from a 0.2% decline in February and marking the steepest pace since August 2025.