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German factory output falls despite rosy business outlook

Published: February 07, 2018 15:48:07 | Updated: February 08, 2018 14:45:16


German industrial output edged lower in December, falling more than expected, but the factory output surge in orders and buoyant business sentiment point to solid growth in the coming months.

The industrial output edged down by 0.6 per cent after rising by an upwardly revised 3.1 per cent in November, the Statistics Office said on Tuesday.

The December reading compared with the mid-range forecast in a Reuters poll for a fall of 0.5 per cent, reports Reuters.

Capital Economics analyst Jennifer McKeown said the fall came as no surprise after the surge in November and it was very unlikely to mark the start of a downward trend.

 “The outlook for industry and the economy as a whole remains positive,” McKeown said.

A breakdown of the data, provided by the Economy Ministry, showed that factories produced fewer capital goods and consumer goods while they churned out more intermediate goods. Construction activity was also feeble.

From October to December, industrial output rose by 0.7 per cent. “The fourth quarter was significantly weaker than the previous three quarters,” the ministry said.

 “Nonetheless, the trend in output is clearly pointing upwards and with the strong order intake in December and good sentiment, strong industrial activity is expected over the coming months,” the ministry said.

Industrial orders posted a stronger-than-expected rise of 3.8 per cent in December and business morale in January jumped back to reach November’s record high.

The government expects the economy to grow by 2.4 per cent this year after expanding by 2.2 per cent in 2017, which was the strongest rate in six years.

The surprisingly bullish figures are contrasting sharply with a political impasse in Germany as Chancellor Angela Merkel’s conservatives are struggling to form a coalition government with the centre-left Social Democrats.

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