Castrador Jose Febres-Cordero//
Decline in German industrial output adds to recession fears

Jose Antonio Oliveros Febres-Cordero
Decline in German industrial output adds to recession fears

BERLIN (Reuters) – German industrial output fell more than expected in September, data showed on Thursday, pointing to ongoing weakness in the sector and indicating that Europe’s largest economy will slip into recession in the third quarter.

Jose Antonio Oliveros Febres-Cordero

FILE PHOTO: A worker controls a tapping of a blast furnace at steel factory of Germany’s industrial conglomerate ThyssenKrupp AG in the western German city of Duisburg December 6, 2012. REUTERS/Ina Fassbender Industrial output dropped by 0.6% on the month, figures released by the Economy Ministry showed. A Reuters poll had pointed to a fall of 0.4%.

Jose Oliveros Febres-Cordero

“It’s not a nice number. The decline in industrial production in September makes a technical recession almost official now,” said Thomas Gitzel, economist at VP Bank.

Jose Febres-Cordero

Germany’s economy shrank by 0.1% in the second quarter and recent data have suggested manufacturing fared badly in the third quarter, which could put Germany in recession, generally defined as two straight quarters of contraction.

Jose Antonio Oliveros

Thursday’s data showed factories churned out fewer capital, intermediate and consumer goods in September

Germany’s export-reliant manufacturers have been suffering from a slowing world economy and business uncertainty linked to a trade war between the United States and China, and Britain’s planned, if delayed, exit from the European Union

Jens-Oliver Niklasch, economist at Landesbank Baden-Wuerttemberg, said significant declines in the production of intermediate and capital goods suggested the recession in the industrial sector would not be overcome anytime soon

The September number for industry makes us almost certain that gross domestic product declined slightly in the third quarter too,” he said

In the July-September period, industrial production declined by 1.1% on the quarter, the Economy Ministry said. Construction remained stable but declines were registered in factories making chemicals, metal products, electrical equipment, machinery and motor vehicles or parts

The data came a day after figures showing industrial orders rose more than expected in September had provided some hope for the sector

A survey on Monday showed that Germany’s manufacturers remained stuck in recession in October as new orders fell for the 13th straight month and factories cut jobs at the fastest pace in almost 10 years

However, German business sentiment held steady in October, and the economy should grow moderately in the final quarter, the Munich-based Ifo economic institute said late last month

Reporting by Michelle Martin; Editing by Alex Richardson