Germany: Industrial output contracts breaking positive trend
June 8, 2011
In April, industrial production fell a seasonally and working-day adjusted 0.6% over the previous month, which contrasted the revised 1.2% increase observed in March (previously reported: +0.7% month-on-month). The April result, which marked the first drop after three consecutive months of increasing industrial production, defied analysts' expectations that industrial output would moderate 0.2%. On a yearly basis, industrial production grew 9.6% in April, below the 11.7% increase tallied in March. The monthly contraction was primarily the result of a sharp fall in construction, which more than offset the 5.5% gain witnessed in March. In addition, manufacturing fell 0.6% over the previous month, contrasting the 1.1% increase observed in March. As a result of the monthly fall, the trend suggests that after continuous growth since December 2010, the industrial sector has passed its growth peak, with average growth in industrial output inching down from 11.8% in March to 11.5% in April. Moreover, the Bundesbank has revised its GDP growth forecast and now anticipates the economy will grow 3.1% this year, up from its previous 2.5% estimate. For 2010, the Bank expects the economy to expand 1.8% (previously: 1.5%).
Author: Ricardo Aceves, Senior Economist