German Industrial Output Logs Worse Than Expected Fall

(RTTNews) - Germany's industrial production continued to decline and posted a worse-than-expected fall in December highlighting the fragile nature of the economy.

Data from Destatis showed that industrial output dropped 1.6 percent month-on-month, bigger than the revised 0.2 percent fall in November and also worse than economists' forecast of 0.4 percent decrease.

There were sharp contractions in the chemical industry and in construction. By contrast, the auto sector recorded a notable growth. The production of intermediate goods slid 5.2 percent and that of consumer goods by 0.9 percent. Meanwhile, capital goods production rose 1.3 percent, data showed.

Excluding energy and construction, industrial production decreased 1.5 percent from November. Energy output surged 4.1 percent, while construction shrank 3.4 percent.

On a yearly basis, the decline in industrial production softened to 3.0 percent from 4.3 percent in November.

In 2023, industrial production decreased 1.5 percent from the previous year. The biggest decreases were reported in energy-intensive industrial branches and in energy output.

High energy costs and weak domestic and external demand will cause production to fall further this year, Capital Economics economist Franziska Palmas said.

This is one of the reasons why the economy is forecast to stagnate this year, Palmas added.

ING economist Carsten Brzeski said the German industry remains stuck between cyclical and structural weakness.

However the recent increase in industrial orders brought at least some vague light at the end of what increasingly looks like a very long tunnel, the economist said.

Data released on Tuesday showed an unexpected growth in industrial orders in December driven by aircraft purchases. Orders advanced 8.9 percent from the previous month.