Germany: Industrial output drops sharply in December
Latest reading: Industrial output declined 2.4% in seasonally adjusted month-on-month terms in December, which contrasted November’s 1.3% increase. December’s result marked the worst reading since July and was a steeper downturn than markets had expected. Looking at the details of the release, manufacturing output swung into a sharp contraction in December, construction plus mining and quarrying slowed to a halt, and energy supply lost momentum.
On an annual basis, industrial production dropped 3.1% in December, which was sharper than November’s 2.8% fall. Meanwhile, annual average variation of industrial production was 4.5% in December, matching November’s figure.
Panelist insight: ING’s Carsten Brzeski commented:
“Looking ahead, besides some rather technical rebounds, a substantial recovery of German industry is not in sight, yet. Inventories have continued to increase, instead of turning, and have now been at elevated levels for more than a year. At the same time, order books have started to bottom out but even after yesterday’s strong December increase, they are not filled enough to kick-start a much-needed turn in the inventory cycle.”