German industrial production unexpectedly dropped in September as a slowdown in China and other emerging markets took its toll.
Output,
adjusted for seasonal swings and inflation, fell 1.1% from August, when
it declined a revised 0.6%, data from the Economy Ministry in Berlin
showed on Friday. The reading, which tends to be volatile, compares with
a median estimate for a 0.5% gain in a Bloomberg survey of economists.
Germany is grappling with a slowdown in China and other emerging markets,
key destinations for its exports. With factory orders from countries
outside the 19-nation euro region down 8.6% in the third quarter, the
focus is shifting to strengthening domestic spending fuelled by pent-up
investment demand and consumption.
"Disappointing industrial
production doesn’t bode well for German third-quarter gross domestic
product," said Carsten Brzeski, chief economist at ING-Diba in
Frankfurt.
"The Chinese and emerging-market slowdowns are also leaving their marks on the eurozone’s largest economy."
The euro was down 0.1% at 8.25am Frankfurt time and traded at $1.0874.
Industrial
production fell 0.3% in the third quarter from the previous period as
manufacturing output dropped. In September, factory production declined
1.4% from the previous month.
Third-quarter gross domestic product data are due to be published on November 13.
The
Economy Ministry said on Thursday that manufacturing orders
unexpectedly retreated 1.7% in September, marking the third consecutive
decline. Business confidence as measured by the Ifo institute fell in
October — the first decline in four months.
"German industry is
feeling light headwinds from the global economy, especially because of
the slowdowns in some larger emerging markets," the ministry said in a
statement.
"Companies have reined in production somewhat in light
of the modest development of manufacturing orders in the third quarter.
Business confidence in the industry remains good and speaks in favour of
a temporary weak phase."
Bloomberg
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