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German industrial output unexpectedly records broad-based slump

[FRANKFURT] German industrial production unexpectedly dropped in November, underlining the subdued pace of expansion in Europe's largest economy during the final quarter of 2018.

Output fell 1.9 per cent from the previous month, missing economist estimates for a 0.3 per cent gain. The decline was broad-based across all categories and led by consumer goods and energy. Production was down 4.7 per cent in annual terms.

While data on industrial performance is typically volatile, a number of indicators have signaled continued weakness in the fourth quarter. Bad weather took a toll on deliveries, global-trade tensions damped exports and business confidence is waning. Still, the Bundesbank has held on to its prediction that the economy probably saw "fairly strong" growth at the end of last year.

Consumer goods output declined 4.1 per cent, while energy was down 3.1 per cent.

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The Economy Ministry said the slump was exacerbated by calendar effects as workers took extra time off around public holidays close to the weekend.

Germany's automakers continued to struggle to adjust to new emissions-test procedures, the ministry said.

A bigger-than-expected drop in factory orders reported on Monday was worsened by a jump in aircraft commissions the previous month, though euro-area demand was weak across all categories.

Investors are increasingly pessimistic about the economic situation and prospects in the 19-nation euro area, and more than half of Germany's small and medium-sized enterprises think Europe's biggest economy could contract this year.

Trade data for Germany is due at 8am on Wednesday. Economists predict November saw a monthly drop in exports and stagnating imports.

BLOOMBERG