German Industrial Output Falls Unexpectedly; Export Growth Slows

(RTTNews) - Casting doubt over the sustainability and strength of recovery, German industrial production declined for the second consecutive month in October with contractions in all sub-sectors. Moreover, exports from the largest euro area economy slowed notably in October.

Industrial production fell unexpectedly by 1.2 percent month-on-month, while it was forecast to rise 0.7 percent, data showed Monday.

The decline in October follows a 0.7 percent drop in September and a 1.5 percent rise in August, Federal Ministry of Economics and Technology said Monday.

Driven by capital and consumer goods, manufacturing output dropped 1.1 percent. Likewise, energy and construction output fell 1.9 percent and 1.7 percent, respectively.

On a yearly basis, industrial production grew 1 percent in October, up from September's 0.6 percent rise. But the growth rate was weaker than the 3.1 percent rise expected by economists.

Driven by broad-based weakness in domestic and foreign demand, factory orders fell 2.2 percent, the fastest pace in a year in October.

However, the ministry today said new orders continued its upward trend and sentiment indicators signal an improvement in confidence. Therefore, the the manufacturing sector is likely to expand in months ahead.

According to data released by Destatis on Monday, exports grew only 0.2 percent in October from September. The rate slowed from the 1.6 percent increase seen in the previous month.

Imports, at the same time, rose 2.9 percent, reversing the 1.9 percent fall in September. Economists had forecast a 0.5 percent fall in exports and a 1.1 percent growth in imports.

As a result, the trade surplus declined to a seasonally adjusted EUR 16.8 billion in October from EUR 18.7 billion in September.

The current account surplus fell to EUR 19.1 billion from EUR 20 billion in the previous month. This was forecast to fall to EUR 17 billion.

"With a narrowing trade surplus and dropping industrial production the German economy did not have the overwhelming start to the fourth quarter confidence indicators had suggested," ING Bank NV's economist Carsten Brzeski said.

Jonathan Loynes, chief European economist at Capital Economics, said the numbers put another dent in hopes that Germany will drive a further pick-up in growth in the euro-zone as a whole.

The Bundesbank last week lifted its growth projections for Germany citing economic momentum supported by private consumption. The central bank now expects the gross domestic product to grow 0.5 percent this year, up from the 0.3 percent growth predicted in June.

The German economic growth has moderated, with recent GDP estimates revealing a slowdown in growth to 0.3 percent in the third quarter from 0.7 percent a quarter ago.