Photographer: Krisztian Bocsi/Bloomberg

German Industrial Output Unexpectedly Falls Most Since 2014

Updated on
  • Output slumped 1.5 percent vs estimated 0.1 percent increase
  • Manufacturing orders rose less than forecast in July

German industrial production fell by the most in almost two years in July as manufacturing suffered from subdued global trade.

Production, adjusted for seasonal swings, fell 1.5 percent from the previous month, when it rose a revised 1.1 percent, data from the Economy Ministry in Berlin showed on Wednesday. That’s the lowest since August 2014. The reading, which is typically volatile, compares with a median estimate for a 0.1 percent gain in a Bloomberg survey. Output was down 1.2 percent from a year earlier.

The figures join a slew of data released since the U.K.’s vote to leave the European Union that suggest the outlook for the German economy has weakened. A gauge for private-sector activity fell to the lowest level in 15 months in August and several of the country’s biggest corporations have expressed their concerns over a slowdown in orders. Meanwhile, the Bundesbank reiterated in its last monthly report that growth should pick up in the current quarter.

“The German industry seems to suffer from weaker activity in China, struggling euro-zone peers and a general shift away from manufacturing toward services,” said Carsten Brzeski, chief economist at ING-Diba AG in Frankfurt. “With this in mind, chances remain low that the former backbone of the German economy will quickly return to its old strength.”

The euro was little changed after the report and traded at $1.1253 at 8:39 a.m. Frankfurt time.

Data Breakdown

Construction surged 2.6 percent in July from the previous month, the most since February, according to the report. Energy output was up 2.6 percent. Manufacturing slumped 2.3 percent, driven by a 3.6 percent decline in investment-goods production.

“Good momentum in construction should become more visible now,” the ministry said. “On the other hand, manufacturers continue to be cautious in light of sluggish global demand.”