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German Industrial Output Falls Unexpectedly in August

German industrial output edged down unexpectedly in August, data showed on Wednesday, suggesting that the recovery in Europe’s largest economy from the coronavirus shock could be less powerful than originally hoped for.

Industrial output fell by 0.2% on the month after an upwardly revised rise of 1.4%, figures released by the Federal Statistics Office showed. A Reuters poll had forecast an increase of 1.5%.

The economy ministry said industrial output rose by 5.8% in July and August compared to the previous two months, with car manufacturers reporting an unusually strong increase by 23.8% over the two months.

“Since the easing of lockdown measures in April, there has been an ongoing recovery since May, even if there was a slight decline in August,” the ministry said.

Industrial output now stands at almost 90% of pre-crisis levels in the fourth quarter of 2019, it said.

“Improved business sentiment, rising orders and a decline in the use of Kurzarbeit (job protection schemes) suggest that the sector will continue to catch up,” the ministry said.

The German economy contracted by a record 9.7% in the second quarter as household spending, company investments and trade collapsed at the height of the pandemic.

For the third quarter, the Ifo institute expects 6.6% output growth which is seen slowing to 2.8% in the fourth quarter.

The government expects the economy to shrink by a calendar-adjusted 6.1% this year and to grow by 4.4% next year. This means the economy won’t reach its pre-crisis level before 2022.

(Reporting by Michael Nienaber; Editing by Riham Alkousaa; Editing by Maria Sheahan)

Source: Reuters

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