German Industrial Output Falls after 8 years of steady growth

Carolynn Look  (Bloomberg)

• Output dropped 3% in December vs estimated 0.3% increase
• Economy Ministry says orders indicate revival in coming months

German industrial production unexpectedly fell in December, signaling that Europe’s largest economy isn’t immune to heightened global uncertainty.

Output, adjusted for seasonal swings and inflation, declined 3 percent from November, when it advanced a revised 0.5 percent, the Economy Ministry in Berlin said on Tuesday. The volatile indicator’s worst reading since early 2009 compares with a median estimate for a 0.3 percent increase in a Bloomberg survey. Production was down 0.7 percent from a year earlier.

German business confidence slipped in January and momentum in manufacturing and services slowed as national elections in September and risks related to Brexit and protectionist trade policies in the U.S. weigh on the outlook. Companies assessment of current economic conditions remains favorable, with factory orders surging and unemployment dropping to a record low.
A rise in order intake in the industrial and construction sectors as well as an increase in sentiment indicators in these areas “signal a revival of production growth in coming months,” the Economy Ministry said in an e-mailed statement.

Output was damped by a 3.4 percent decline in manufacturing, according to the data. Construction fell 1.7 percent in December from the previous month, while energy production declined 0.9 percent.
Today’s data come on the back of a Monday report showing factory orders bounced the most since 2014 in December. The surge was driven by demand for investment goods and saw both domestic and export orders increasing.