German industry output slumps in October, durables weigh

BERLIN Fri Dec 7, 2012 6:50am EST

BERLIN (Reuters) - German output slumped in October and looked set to remain subdued throughout the fourth quarter, the economy ministry said on Friday, adding to fears of a slowdown in Europe's largest economy which could plunge the euro zone deeper into recession.

Output fell by 2.6 percent in October, a far steeper drop than the decline of 0.5 percent forecast in a Reuters poll of 37 economists. The ministry blamed weakness in durable and capital goods production for the fall.

Factories churned out 4.3 percent fewer capital goods and produced 6.2 percent fewer durable goods on a monthly basis. Activity in the construction sector slipped 5.3 percent on the month.

"The weaker order-intake of previous months is starting to show in industrial output. Production could fall notably in the fourth quarter," said economist Juergen Michels at Citigroup.

"Decent Christmas trade and robust consumer spending won't pick up the slack. The economy could shrink at the end of the year," he added.

September output data was upwardly revised slightly to a fall of 1.3 percent, from a previous decline of 1.8 percent.

Data released on Thursday showed industrial orders had risen 3.9 percent in October. The economy ministry said that despite this rise output would remain subdued.

Friday's data added to the gloom after Germany's Bundesbank cut its growth outlook for the country next year to just 0.4 percent from a previous 1.6 percent and pointed to risks of a recession as the euro zone debt crisis takes its toll.

(Reporting by Alexandra Hudson, Editing by Gareth Jones)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
haddin wrote:
“Industry Output Far Below Expectations” and “Mfg Orders Far Above Expectations” it is a mixed scenario. It is still good that the Manufacturing orders are soaring. The car and parts makers are focusing on diversifying their market. For example, Volkswagen, Audi, BMW, Schaeffler are looking for bigger footprint in India. Schaeffler has invested in R&D in India to find localized solution for Indian condition. Schaeffler is also increasing the investment and hiring more people in Hungary and USA. And, achieved 4.2% revenue growth. Since, the Europe is in slow phase, the lucrative market is elsewhere.

Dec 07, 2012 1:08pm EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.