German manufacturing unexpectedly drops in November

German industrial production was much worse than expected in November, underscoring the headwinds the euro zone’s powerhouse economy faced at the end of 2018.

The wide-ranging economic measure was down 1.9 per cent from October, according to the Federal Statistics Office (Destatis). It was the third month in a row of decline and much worse than the 0.3 per cent uptick forecast by economists in a Reuters poll.

The fall is another indicator of the cooling in the euro zone economy, as global trade battles and political uncertainty weigh on sentiment.

Industrial production was down 4.7 per cent from the same month a year ago, according to Destatis.

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Production in industry, which excludes energy and construction, fell by 1.8 per cent from the previous month. The production of capital goods also fell by 1.8 per cent and the production of intermediate goods, items that will be turned into a final product, fell by 1 per cent.

Tumbled

Consumer goods tumbled by 4.1 per cent. Energy production declined by 3.1 per cent and construction products fell by 1.7 per cent.

“This headline is much worse than we expected. Production was hit by weakness across the board, but the 4.1 per cent month-to-month drop in output of consumer goods did the main damage,” said Claus Vistesen, economist at Pantheon Macroeconomics. Summing up the data in one line, he said: “Berlin, we have a problem.”

Euro zone economic forecasts fell again on Monday after a survey of economists by Consensus Economics found that GDP is expected to grow just below 1.6 per cent this year, 0.4 percentage points lower than an already conservative estimate from March.

Germany is expected to grow more slowly than France, expanding below 1.5 per cent in 2019, according to the Consensus Survey. – Copyright The Financial Times Limited 2019