Germany: German industrial output contracts again in July
Industrial production fell 0.6% in month-on-month seasonally- and calendar-adjusted terms in July, compared to a 1.1% contraction in June. Despite a slight improvement from the previous month, the second consecutive contraction in the all-important industrial sector fueled recession fears in the Eurozone’s largest economy.
July’s result chiefly reflected slumping production of intermediate and capital goods which more than offset an uptick in the production of consumer goods. Notably, the energy sector posted another strong fall in July, only partly offset by an uptick in construction activity.
On an annual basis, industrial output dropped 4.2% in July, only mildly above the revised 4.7% (previously reported: -5.2% year-on-year) contraction logged in the previous month. July marked the ninth consecutive month of falling annual output. Annual average industrial output, meanwhile, fell 2.3% in July, from 1.9% in June.
Commenting on the release, Carsten Brzeski, Chief Economist ING Germany, highlighted pessimism over the short-term outlook:
“German industry continues to suffer from structural changes and the ongoing trade conflict. […] At least in the short run, the prospects for German industry remain bleak. Even with a magnifying glass, it is impossible to find signals of an imminent rebound. Shrinking order books, high inventories and continuing external uncertainty do not bode well for the coming months.”