Germany: Industrial output tumbles in October
December 7, 2012
In October, industrial output contracted 2.6% over the previous month in seasonally adjusted terms. The figure exceeded both the revised 1.3% drop observed in September (previously reported: -1.8% month-on-month) and market expectations, which had seen industrial production declining a softer 0.5%. A sharp contraction in construction and a further deterioration in manufacturing were the main drivers behind the monthly decline.
Compared to the same month the previous year, industrial output fell a working-day adjusted 3.7% in October, which represented a deterioration compared to the revised 0.8% drop observed in September (previously reported: -1.2% year-on-year). As a result, the trend continues to point downward, with annual average growth in industrial production falling from 0.6% in September to 0.0% in October.
The Bundesbank cut significantly its growth projections for 2013 and now expects the economy to grow 0.4%, well below its previous 1.6% estimate. For 2014, the Bank sees the economy rebounding, with economic growth of 1.9%, if "the euro-area banking and sovereign debt crisis does not escalate further". Meanwhile, the government sees economic growth at 1.0% in 2013.
Author: Ricardo Aceves, Senior Economist