German Industry Shrinks For Sixth Month As Recession Looms
German industrial output unexpectedly declined in November, underscoring the persisting manufacturing woes in Europe’s largest economy.
(Bloomberg) -- German industrial output unexpectedly declined in November, underscoring the persisting manufacturing woes in Europe’s largest economy.
Production declined 0.7% from October, led by capital goods, and intermediate goods, the statistics office said Tuesday. That’s the sixth consecutive drop and defies economists in a Bloomberg survey, who’d predicted a 0.3% increase.
Germany probably ended 2023 with its first recession since the pandemic, as analysts reckon data will reveal a second straight contraction in output in the fourth quarter.
Manufacturers — Germany’s economic backbone — are struggling from costly energy, higher global interest rates and a slowdown in China.
What Bloomberg Economics Says...
“Disappointing November production data and the recent business expectations deterioration point to a bumpy start to the year for industry. We maintain our baseline view for a slight GDP increase in the first quarter of 2024, driven by a higher dynamic in the service sectors. There is substantial risk, however, that a more pronounced industry weakness will drag the economy down again in 1Q24.”
—Martin Ademmer, economist. For full React, click here
The figures come a day after a reading for factory orders also fell short of expectations. Additionally, with the government strait-jacketed over ramping up investment and train strikes looming this week, few economists anticipate much of a pickup this year.
German railway operator Deutsche Bahn AG’s attempt to halt strikes — due Wednesday-Friday — via a court injunction was rejected by Frankfurt’s labor court on Monday.
--With assistance from Joel Rinneby and Kristian Siedenburg.
(Updates with Bloomberg Economics in after fourth, details on train strike in final paragraph)
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