Germany Industrial Production Declines Most In 6 Months

Germany’s industrial production declined at the fastest pace in six months in October, led by a sharp decrease in capital goods output in October, data from Destatis revealed on Friday.

Industrial production decreased 1.7 percent on a monthly basis in October, much bigger than the 0.6 percent fall logged in September.

Output decreased at the fastest pace in six months, while economists had forecast a 0.1 percent growth.

On a yearly basis, industrial output declined 5.3 percent, following a revised 4.5 percent decrease in September. Production was expected to decline moderately by 3.6 percent in October.

Excluding energy and construction, production was down by 1.7 percent. Energy output advanced 2.3 percent, while construction output decreased 2.8 percent.

Production of intermediate goods increased 1.0 percent and that of consumer goods gained 0.3 percent. Meanwhile, output of capital goods showed a decline of 4.4 percent.

The economy ministry said the downturn in the industry continues in October. However, recent developments in new orders and business expectations indicate that a stabilization trend could emerge in the coming months, the ministry noted.

Data released on Thursday showed that factory orders declined 0.4 percent in October on weak domestic demand.

Looking ahead, both soft and hard indicators bode ill for industrial activity in the months ahead, Carsten Brzeski, an ING economist, said.

Trade conflicts, global uncertainty and disruption in the automotive industry have put the entire German industry in a headlock, from which it is hard to escape, the economist noted.

Ralph Solveen, an economist at Commerzbank, said a pronounced recession remains as unlikely as a noticeable upturn in the economy.

In the third quarter, the largest euro area economy had skirted recession. The economy had expanded 0.1 percent driven by spending and construction investment.

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