German industrial output fell short in April. Following disappointing new orders data earlier this week, German industrial output climbed less than expected in April, dimming the euro zone’s largest economy’s outlook.
The federal statistical office reported Wednesday that production rose 0.3% over the previous month. A Reuters survey predicted a 0.6% rise.
Pharmaceutical production surged 6.4%, construction rose 2%, and automotive production fell 0.8%.
The statistics agency revised March industrial production to a 2.1% loss from a 3.4% drop.
Despite this change, German industrial production is 1.6% below last year.
“Prospects for the rest of the year look poor,” said chief Europe economist Andrew Kenningham.
Kenningham said the German boost industry got from easing global supply difficulties and reduced gas prices at the start of this year seems to have depleted. Output will likely be increasingly hampered by sluggish demand as the backlog of work dwindles, and new orders shrink.
On Tuesday, industrial orders dipped 0.4% in April.
Commerzbank’s senior economist Ralph Solveen stated that despite weak new orders, order backlogs from the pandemic supported April’s output gain.
“However, without a pickup in demand, for which there are currently no indications, it is only a matter of time before companies start to scale back production,” Solveen added.
May’s HCOB manufacturing PMI revealed a steep dip in new orders for goods producers. According to companies, exports to China, Europe, and the US fell.
“Without any significant pick up in activity, the German economy’s recession could continue in the second quarter,” warned ING’s global macro director Carsten Brzeski.
