German industry output plunges in June

BERLIN (AFP): German industrial output plunged in June, official data showed Monday, with the economy ministry warning of a gloomy outlook as high energy prices and interest rates took their toll.

Output fell for the second consecutive month, but the drop of 1.5 percent from a month ago was wider than the 0.1 percent slip in May, according to data published by the Federal Statistics Office Destatis.

It was also a bigger fall than expected by analysts polled by Factset, who forecasted a 0.5 percent decline.

Germany’s industrial heavyweight automobile sector showed a significant fall of 3.5 percent.

“The outlook for the industrial economy remains gloomy despite the rising demand, because these are strongly affected by fluctuations of big orders,” said the economy ministry.

“Given the subdued business and export expectations of companies, there is currently no sign of a noticeable recovery.”

ING analyst Carsten Brzeski said the latest poor data was “another illustration of the country’s ongoing stagnation” and warned that it could also be a harbinger of further bad news.

“With today’s numbers, the risk has increased that the flash estimate of stagnating GDP growth in the second quarter could still be revised downwards,” he said.

Germany unexpectedly slipped into a mild recession in the final months of 2022 and the start of 2023, as the energy crisis sparked by Russia’s invasion of Ukraine and higher interest rates took their toll on companies and households.

Europe’s largest economy is projected to contract by 0.3 percent in 2023, according to the Bundesbank’s newest forecasts in June.