German Industry Unexpectedly Records Broad-Based Slump

(Bloomberg) -- German industrial output unexpectedly fell in November, putting the economy at risk of slipping into a technical recession at the end of 2018.

The 1.9 percent drop followed a 0.8 percent decline in October and extends a run of disappointing numbers from Europe’s largest economy. The decline in November production was broad-based and led by consumer goods and energy. Output was down 4.7 percent year-on-year, the most since 2009.

While data on industrial performance are typically volatile, a number of indicators have signaled continued weakness in the fourth quarter and amplified concerns about the economy. Bad weather took a toll on deliveries at the end of last year, global-trade tensions damped exports and business confidence waned. Still, the Bundesbank has held on to its prediction that the economy probably saw “fairly strong” growth at the end of last year.

German Industry Unexpectedly Records Broad-Based Slump

Key Insights

  • The Economy Ministry said the slump was exacerbated by calendar effects as workers took extra time off around public holidays close to the weekend, while automakers continued to struggle to adjust to new emissions-test procedures.
  • Consumer goods output declined 4.1 percent, while energy was down 3.1 percent.
  • A bigger-than-expected drop in factory orders reported on Monday was worsened by a jump in aircraft commissions the previous month, though euro-area demand was weak across all categories.


  • “At face value, today’s industrial production data has clearly increased the risk of a technical recession in Germany in the second half of 2018,” said Carsten Brzeski, chief economist at ING Germany. “On the other hand, private and public consumption still have the potential to offset recession forces.”
  • The euro fluctuated after the report and traded at $1.1444 at 8:32 a.m. Frankfurt time, down 0.3 percent.

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  • Investors are increasingly pessimistic about the economic situation and prospects in the 19-nation euro area, and more than half of Germany’s small and medium-sized enterprises think Europe’s biggest economy could contract this year.
  • Trade data for Germany is due at 8 a.m. on Wednesday. Economists predict November saw a monthly drop in exports and stagnating imports.

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