German Industrial Output Takes Another Hit From Temporary Issues

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German industrial production unexpectedly fell in January as new temporary factors in the car industry damped momentum.

Output declined 0.8 percent -- missing economist estimates for a 0.5 percent gain -- and was down 3.3 percent on the year. The Economy Ministry said car-model changes and strikes at suppliers emerged as new challenges. It revised December figures to show a solid increase, after initially reporting a drop.

German Industrial Output Takes Another Hit From Temporary Issues

A separate report last Friday showed that factory orders in the same month saw an unexpected decline of 2.6 percent, though a December reading was also revised up. Trade data showed stagnation in exports in January and a 1.5 percent jump in imports. Labor costs slipped in the fourth quarter.

The downbeat industrial data come after the European Central Bank slashed its 2019 outlook for the euro area by the most since just before quantitative easing, unveiled fresh stimulus and pledged to keep interest rates low for longer. Germany has been at the crux of the region’s manufacturing-led slowdown, though many economists predict a rebound as the effects from temporary setbacks begin to fade.

The country’s Bundesbank hasn’t updated its own projections, but its latest assessment was that Germany is seeing a dent in momentum. The economy barely skirted a recession at the end of last year.

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