EUROZONE SHOCK: German industrial production collapses unexpectedly – ‘Momentum LOST’
GERMANY, the Eurozone’s flagship country has suffered a shock and unexpected drop in industrial output, the biggest in more than two years.
By DARIUS MCQUAID
Express.co.uk
Fri, Apr 6, 2018
Output in Angela Merkel’s nation fell by 1.6 percent in February. This came after an original prediction of a rise of 0.3 percent but this proved to be well wide of the mark.
And it comes after the January output had seen a revised production output with an increase of 0.1 percent.
The German Economy Ministry believes the industrial sector is losing momentum following the shock resuts.
The data shows the biggest slowdown was in the production of capital goods which fell by 3.1 percent on the month.
Output of consumer goods fell by 1.5 percent and intermediate goods were down by 0.7 percent. On the whole construction activity was also weaker by 2.2 percent.
The German Economy Ministry said: “Industrial production has lost momentum. However, the good orders situation and the positive mood among companies suggest the industrial sector will remain on an upward path.
“Growth momentum is nonetheless likely to be weaker than in the previous year.”
The Association of German Chambers of Industry and Commerce (DIHK) said a very forbearing note regarding the potential US and China trade war which could harm the global economy as well as weaken demand for German goods and services.
Sophia Krietenbrink, head of division for economy, growth and company issues at the DIHK, said: “On the demand side, the main question is how the current trade conflict develops.
“If the duties cut or hinder global value chains, this could also affect the sales opportunities of German companies in the medium term.”
German carmakers are already under pressure to move production of their sports vehicles out of the US due to the rising tensions between the two giants.
March saw German business drop lower for the second consecutive month, falling to its lowest level in nearly a year.
Germany is becoming increasingly concerned by the threat of protectionism.
Protectionism is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations.
These are similar to such methods President Donald Trump has recently announced. Both French president Emmanuel Macron and German Chancellor Angela Merkel will visit President Trump towards the end of April.
The two leaders will most likely use this time to ask for an extended EU exemption from the steel and aluminium tariffs which Mr Trump announced.
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