German industry records historic 18% drop in output

German industrial production plunged by a record 18 per cent in April, as the coronavirus lockdown caused major disruption to factories across most manufacturing sectors of Europe’s biggest economy.

The vast German auto industry was hit hardest by the pandemic after its output collapsed to a quarter of its level the previous month.

The data, which the federal statistics agency said revealed the biggest fall since its records began in 1991, underlined the heavy toll the coronavirus crisis has taken on Europe’s industrial heartland – even though many German factories have managed to stay open.

Production

Over the year to April, German industrial production fell more than 25 per cent, outstripping the 20 per cent cumulative fall in output during the 2008 financial crisis.

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“Today’s data also illustrate how an open economy like Germany has been hit severely by the lockdown measures both at home and abroad,” said Carsten Brzeski, economist at ING. “Compared with the first quarter, industrial production is currently down by 30 per cent.”

Worse may still be to come after German factory orders plunged 25.8 per cent in April, the largest-ever monthly decline and almost double the previous record set only the month before.

Figures released on Thursday showed car sales in Germany halved in May, in comparison with the same month last year, despite car dealerships having been open since the end of April. Total car production in the first five months of the year fell to lows not seen since 1975.

Decline

Germany’s economy contracted 2.2 per cent in the first quarter. The country’s central bank said on Friday it expected “another and overall even greater decline in the second quarter, although the economy had already bottomed out in April and is starting to grow again”.

Overall, the Bundesbank forecast the German economy would contract by 6 per cent this year, cushioned by the €130 billion stimulus package announced by the government last week. – Copyright The Financial Times Limited 2020