German production down in September
Industrial production in Germany unexpectedly declined in September, adding to signs Europe’s largest economy is losing momentum.
Output fell 0.8pc from August, when it rose 1.5pc, the Economy Ministry in Berlin said today. Economists had forecast a 0.4pc gain, the median of 35 estimates in a Bloomberg News survey showed. From a year earlier, production increased 7.9pc when adjusted for the number of work days.
Demand for German manufactured goods may wane as the global economic recovery stutters and the stronger euro hurts price competitiveness outside the 16-nation currency bloc.
At the same time, governments in the euro area, Germany’s biggest export market, are cutting spending as investors grow increasingly concerned about excessive budget deficits.
“German industry is slowing down,” said Aline Schuiling, an economist at ABN Amro Bank NV in Amsterdam. “European governments are stepping up the pace of fiscal tightening, while world trade growth has weakened as well.”
Manufacturing output fell 0.9pc in September, today’s report showed. Production of investment goods was unchanged in the month and consumer goods production fell 0.6pc. Energy production increased 1.2pc and construction output rose 0.4pc.
The Bundesbank expects German growth to slow to about 0.5pc in the third and fourth quarters from 2.2pc in the second, which was the fastest pace in two decades. The economy may expand more than 3pc this year, the central bank predicts.
Germany’s Linde AG, the world’s second-biggest maker of industrial gases, said last week that third-quarter profit rose 50pc as the global recovery raised demand from car and chemical manufacturers.
Continental AG, Europe’s second-biggest car-parts maker, raised its 2010 forecasts for the second time this year after sales in China, Brazil and other emerging markets helped bolster profits.
“The global recovery is expected to proceed, and this should imply a continued positive impact on the demand for euro- area exports,” European Central Bank President Jean-Claude Trichet said last week.
German exports jumped 3pc in September after two months of decline, the Federal Statistics Office said today. Still, factory orders unexpectedly dropped 4pc in September, led by a slump in euro-area demand for investment goods.
Beiersdorf AG, the German maker of Nivea skin creams, last week cut its full-year margin forecast as third-quarter profit missed estimates because of falling volumes in Europe.
“Demand for goods made in Germany remains high, but it’s unlikely to be as dynamic as it was in the first half of the year,” said Carsten Brzeski, an economist at ING Group in Brussels. “We will have growth, but by no means at the same level.”