German Industrial Output Falls Unexpectedly, Orders Plunge

(RTTNews) - Germany's industrial production declined unexpectedly in January and factory orders reported a double-digit contraction, official data revealed Monday.

Industrial production posted a monthly fall of 0.5 percent in January, which was slower than the 1.0 percent decrease in December, Destatis reported. Output was expected to climb again by 1.0 percent.

At the same time, factory orders plunged 11.1 percent in January, reversing last month's 6.4 percent growth, Destatis said in a separate report. Economists had forecast a moderate decline of 4.2 percent.

Excluding energy and construction, industrial production fell 2.5 percent in January compared to December.

The overall decline in industrial production reflects sharp contractions in the manufacture of metal products and the pharmaceutical industry.

Production of consumer goods decreased 4.2 percent and that of intermediate goods by 2.6 percent. Capital goods output was down 1.6 percent.

Regarding orders, data showed that foreign orders registered a 7.1 percent drop as both demand from the euro area and non euro area countries decreased in January. Domestic orders logged a double-digit fall of 16.2 percent.

Year-on-year, industrial production was down 1.2 percent following a 0.4 percent rise in December. At the same time, annual growth in orders eased to 3.7 percent from 11.7 percent.

Further, data showed that manufacturing turnover grew 1.5 percent on a monthly basis in January after falling 0.4 percent in December.

Although industrial production is struggling to gain momentum, an upswing remains in the making, even if surging oil prices could clearly spoil the party, ING economist Carsten Brzeski said.

He noted that order book positions since the summer and some EUR 200 billion of fiscal stimulus for defense and infrastructure this year are still strong arguments to expect an unfolding of a decent industrial rebound.

However, today's data as well as surging oil prices show that it will definitely not be a walk in the park, the economist added.