Germany: Industrial production contracts more than expected
June 6, 2012
In April, industrial output slipped a seasonally adjusted 2.2% over the previous month, which offset the revised 2.2% increased observed in March (previously reported: +2.8% month-on-month). The fall exceeded market expectations of a 1.0% drop. The reading was broad-based, with all sub-categories, with the exception of energy supply, recording contractions over the previous month. Compared to the same month last year, industrial production contracted a working-day adjusted 0.7% in April, which contrasted the 1.4% expansion observed in March and marked the sharpest drop since December 2009. As a result of the monthly decline, the trend continues to point downwards, with annual average growth in industrial production falling from 5.1% in March to 4.2% in April. The government expects the economy to expand 0.7% this year, before accelerating to 1.6% in 2013. Meanwhile, the Bundesbank revised its growth forecasts and now expects the economy to grow 1.0% this year, up from its previous 0.6% estimate. For 2013, the Bank sees economic growth picking up to 1.6%, which was down from its previous 1.8% projection.
Author: Ricardo Aceves, Senior Economist