German industrial output falls more than expected in September
By Michele Maatouk
Date: Thursday 07 Nov 2019
(Sharecast News) - German industrial production fell more than expected in September, adding to worries about a recession, according to figures released by Destatis on Thursday.
Industrial output declined 0.6% on the month following a 0.4% increase in August, missing expectations for a smaller drop of 0.4%.
On the year, production slumped 4.3% compared to a 3.9% fall in August and versus expectations of a 2.9% decline.
Production in industry excluding energy and construction was down 1.3%. Within industry, the production of intermediate goods fell 1.3% while output of capital goods was down 1.5%. The production of consumer goods fell 0.5%. Outside industry, energy production was 2% higher in September and the production in construction increased 1.8%.
Andrew Kenningham, chief Europe economist at Capital Economics, said: "The decline in industrial production in September confirms that German manufacturers are still firmly in a recession. We expect this to continue well into next year, causing the economy as a whole to contract."
ING economist Carsten Brzeski said: "Yesterday, new orders rebounded after two consecutive drops, adding to hopes that the manufacturing sector and with it, the entire economy could finally end the free fall which started in the summer of 2018. However, today's industrial production data shows that any optimism on the outlook for German industry is premature.
"Looking ahead, while there has been some stabilisation in confidence indicators, more structural factors in German industry continue to bode ill for industrial production in the coming months. Capacity utilisation has dropped to the lowest level since the first quarter of 2016. In line with lower capacity utilisation, equipment as a limiting factor to production has also eased significantly and even the long pressing issue of the lack of qualified workers is disappearing.
"The latter clearly provides further evidence that the German labour market is also feeling the economic slowdown. Even in case of some easing of the current trade conflicts and an end to the Brexit uncertainty, it will probably take until the first quarter of next year to see a significant rebound of German industry."
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