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German Industrial Output Falls; Exports Rise Marginally

Germany’s industrial production declined more-than-expected and exports grew only marginally in December, signaling that the manufacturing sector is not out of the woods yet.

Industrial production decreased by a more-than-expected 3.5 percent on month in December, in contrast to a revised 1.2 percent rise in November, Destatis reported Friday. Output was forecast to fall 0.2 percent.

On a yearly basis, industrial production plunged 6.8 percent, faster than the 2.5 percent decrease seen in November. Economists had expected a 3.7 percent decrease.

Excluding energy and construction, industrial production was down by 2.9 percent. Energy production grew 2.0 percent, while construction output fell 8.7 percent.

Data released on Thursday showed that factory orders fell 2.1 percent month-on-month in December, which was the biggest decrease since February.

Yesterday’s disappointing new orders, as well as possible supply chain disruptions from the economic impact of the coronavirus in China, are likely to delay the stabilization and suggest that any recovery will be slow and gradual, Carsten Brzeski, an ING economist, said.

Today’s data is another reminder that 2019 was definitely a year to forget for German industry, Brzeski added.

While the December slump is likely to be at least partly reversed in January, this is unlikely to be the end of the industrial recession, Andrew Kenningham, an economist at Capital Economics, said.

Any pick-up in January will prove short-lived given the mounting evidence that auto firms are struggling to secure components due to the coronavirus, and the prospect of softer demand for exports from Asia, he added.

The economy ministry said the improved sentiment among companies suggests that the industrial economy will brighten up somewhat in the coming months.

Another report from Destatis revealed that exports rose marginally and imports declined for the second straight month in December.

Although, in 2019, German exports and imports exceeded the former record highs of 2018, the trade surplus decreased from last year. Exported were valued at EUR 1,327.6 billion and imports at EUR 1,104.1 billion.

The foreign trade surplus fell to EUR 223.6 billion in 2019 from EUR 228.7 billion in 2018.

In December, exports grew only 0.1 percent on month in December, reversing a 2.2 percent decrease a month ago. Economists had forecast a 0.6 percent monthly rise.

At the same time, imports dropped 0.7 percent after easing 0.6 percent in November. Imports were forecast to grow 0.3 percent. This was the second consecutive decrease.

As a result, the trade surplus rose to a seasonally adjusted EUR 19.2 billion from EUR 18.5 billion in the previous month.

On a yearly basis, exports advanced 2.3 percent and imports gained 1.2 percent. Consequently, the trade surplus totaled an unadjusted EUR 15.2 billion versus EUR 14.1 billion surplus a year ago.

The current account surplus came in at EUR 29.4 billion in December versus EUR 22.3 billion in the same period last year.

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