German factory output falls for second month in a row

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German industrial production posted a surprise fall in September, contracting for the second consecutive month as the slowdown in the world’s leading emerging markets weighed on Europe’s biggest economy.

Output slumped by 1.1 per cent month-on-month in September after falling by 0.6 per cent August, the Ministry of Economics said Friday.

Analysts surveyed by dpa-AFX had expected a rise of 0.5 per cent in September.

“Following a good performance during the first half of the year, German industry is facing light headwinds from the global economy, in particular as a result of the slowdown underway in some larger emerging markets,” the ministry said.

However, the ministry also said: “Business confidence in the industry remains good, which points to only a temporary weak phase.”

Still, the output data adds to concerns that the German economy has lost momentum during the third quarter as growth has cooled in key emerging economies notably in China, Brazil and Russia.

Releasing the data, the ministry revised up its August figure from an originally estimated 1.2-per-cent drop.

But output contracted by 0.3 per cent in the third quarter compared with the three months to the end of June.

The production data follows Thursday’s release of data showing the third consecutive monthly fall in factory orders.

Taken together the data adds to concerns that third-quarter economic growth figures, due to be released next Friday, could come in lower than currently forecast.

Analysts expect the GDP figures to show the German economy slowed from 0.4 per cent quarter on quarter in the three months to the end of June to 0.3 per cent in the third quarter.

“September’s unexpectedly sharp fall in German industrial production was a worrying sign that GDP growth may have slowed in third quarter even in the eurozone’s strongest economy,” said Jessica Hinds, European economist with the Capital Economics research group.

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