Germany: German industrial output drops markedly in June
August 7, 2019
Industrial production tanked in June as output fell 1.5% month-on-month in seasonally- and calendar-adjusted terms, contrasting the revised meager 0.1% expansion in May (previously reported: +0.3% month-on-month). The drop in June was driven by a broad-based deterioration: Output of intermediate goods; capital goods; consumer goods; and energy all fell notably. More positively, the construction sector posted tepid growth after two months of contraction. Carsten Brzeski, chief economist at ING Germany, noted that “the weak performance of the construction sector means that this sector – contrary to anecdotal evidence that it was still booming – has been a drag on growth in the second quarter.”
Industrial output dropped a whopping 5.2% over the same month a year prior, a stronger contraction than May’s revised 4.4% decrease (previously reported: -3.7% year-on-year). Annual average industrial output, meanwhile, fell 2.0% in June following May’s 1.3% drop.
Brzeski further pointed out that on top of intensifying external headwinds and structural changes in the industrial sector, weak domestic demand further darkens the horizon. “We would characterize today’s industrial report as devasting, with no silver lining.”
Author: Jan Lammersen, Economist