Germany’s industrial sector avoided a contraction in December last year, despite COVID-19 lockdowns at home and abroad, as strong demand from China helped export-oriented manufacturers in Europe’s largest economy weather the COVID-19 pandemic.
Industrial output was flat on the month after an upwardly revised increase of 1.5 percent in the previous month, figures released by the German Federal Statistics Office showed.
This was the first stagnation following seven consecutive months of expansions.
Photo: Reuters
The main drag came from construction where output fell by 3.2 percent. Looking at core manufacturing alone, output rose by 0.9 percent on the month.
“The German manufacturing sector has performed relatively well in recent months and that’s mainly thanks to the well-running Chinese economy,” VP Bank economist Thomas Gitzel said.
“If production in China is humming, local production is also humming here,” Gitzel said, adding that the German automobile industry with its premium vehicles was benefiting in particular from the good income situation in China.
Last year as a whole, production in the manufacturing sector tumbled by a calendar-adjusted 8.5 percent year-on-year, in further proof of the wider economic devastation caused by the pandemic.
The German Federal Ministry for Economic Affairs and Energy said that the outlook for the industrial sector remained subdued given further development of the pandemic and supply bottlenecks in the semiconductor industry.
A drop in industrial orders and a decline in business morale were clouding the outlook further, the ministry added.
Data last week showed that orders for German-made goods fell more than expected in December, ending a seven-month streak of positive data as restrictions to contain the pandemic dragged on demand from other EU countries.
This followed a survey by the Ifo Institute for Economic Research which showed that German business morale slumped to a six-month low last month as a second wave of COVID-19 halted a recovery in the economy.
The institute said it expects the German economy to stagnate in the first quarter, while the Commerzbank AG predicts a decline.
The government last month slashed its GDP growth forecast to 3 percent this year, from last autumn’s estimate of 4.4 percent.
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