Germany Industrial Output Declines In September
07 November 2019 - 3:27PM
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Germany's industrial production declined more than expected in
September, defying hopes for a rebound, data from Destatis revealed
Thursday.
Industrial production fell 0.6 percent month-on-month in
September, reversing a 0.4 percent rise in August. Economists had
forecast a moderate drop of 0.3 percent.
On a yearly basis, industrial output was down 4.3 percent, which
was faster than the 3.9 percent decrease logged in August.
Production was expected to decrease 4.4 percent.
Data came after the release of factory orders on Wednesday that
showed a rebound in demand in September. Orders advanced 1.3
percent, reversing August's 0.4 percent fall.
Hopes for a quick rebound of German industry were short-lived,
Carsten Brzeski, an ING economist said. The only upside from the
data is construction activity.
With the September rebound, construction should have been a weak
but positive growth driver in the third quarter, Brzeski noted. The
recent development of incoming orders gives at least some hope,
Ralph Solveen, a Commerzbank analyst said. Nevertheless, a rapid
turnaround in production is not to be expected.
Solveen said a slight drop in production can also be expected
for the fourth quarter. The economy ministry said the weakness in
the industry is not yet overcome. However, the slight improvement
in orders and business expectations brightened the outlook for the
fourth quarter somewhat.
The German government's independent economic advisers slashed
the growth forecast on Wednesday but said a severe recession is
unlikely.
Advisers lowered growth outlook for 2019 to 0.5 percent from 0.8
percent and the projection for next year to 0.9 percent from 1.7
percent.
The government also forecast 0.5 percent expansion for 2019 and
1 percent growth for 2020.
Excluding energy and construction, industrial production fell
1.3 percent from the previous month. Energy output advanced 2
percent and construction expanded 1.8 percent in September.
Purchasing Mangers' survey from IHS Markit showed on Thursday
that Germany's construction sector grew the most in six months in
October. The Purchasing Managers' Index rose to 51.5 from 50.1 in
September.
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