Germany: Industrial production falls markedly in December
February 7, 2020
December data saw German industry end 2019 on a sour note, with industrial production contracting 3.5% month-on-month on a seasonally- and calendar-adjusted basis, contrasting the upwardly revised 1.2% monthly expansion logged in November (previously reported: +1.1% month-on-month). The December data revealed that the downturn was broad-based as production of capital, intermediate and consumer goods all decreased. Activity in the construction sector also fell, while energy production rose.
On average, industrial production fell at an accelerated rate in Q4 compared to the third quarter as the sector remained in a tough spot—amid lingering trade tensions, weak global economic momentum and structural challenges in the automotive sector—and a drag on sequential economic growth.
Compared to the same month a year prior, industrial output fell 6.8% (November 2019: -2.5% year-on-year) and marking the steepest annual contraction since November 2009. Annual average industrial production, meanwhile, fell 3.5% in December, down from November’s 3.2% drop.
Turning to this year, the downturn in the industrial sector is expected to linger, although output is forecast to drop at a much softer pace. Moreover, the balance of risks remains tilted to the downside as external headwinds remain in place.
Author: Jan Lammersen, Economist