German Industrial Output Falls Unexpectedly

(RTTNews) - Germany's industrial production declined unexpectedly in March as the war in the Middle East started to take its toll on industrial activity, official data revealed Friday.

Industrial output dropped 0.7 percent in March, marking the second consecutive monthly decline, Destatis reported. The fall confounded economists' forecast of a 0.4 percent increase and followed a 0.5 percent drop in February.

Excluding energy and construction, industrial output was down 0.9 percent from February.

Capital goods output dropped 1.6 percent and consumer goods output decreased 1.9 percent. On the other hand, intermediate goods output grew 0.8 percent.

Energy production declined 4.0 percent and the manufacture of machinery and equipment reported a 2.7 percent fall. By contrast, construction output grew 1.9 percent and automotive industry registered a 1.9 percent growth.

On a yearly basis, industrial production decreased 2.8 percent after posting a 0.2 percent fall.

"Weak March industrial production suggests that a downward revision of the surprisingly strong first-quarter GDP data is still possible," ING economist Carsten Brzeski said.

The flash GDP estimate showed that the largest euro area economy grew 0.3 percent in the first quarter after rising 0.2 percent in the fourth quarter.

Brzeski cautioned that given continued soaring energy prices in April and increased risks of supply chain disruptions, any near-term improvement in industrial production appears very unlikely.