German industrial output plunges in December

German industrial output plunges in December

German industrial output plunges in December

German industrial production plunged in December, official figures showed yesterday, as an energy crisis triggered by the Ukraine war took its toll on Europe’s top economy.

Output fell 3.1 percent on the previous month, more sharply than expected, according to preliminary data from federal statistics agency Destatis.

Updated figures showed that production rose 0.4 percent month-on-month in November.

The figures showed that “the expected winter economic slowdown” was occurring, the economy ministry said in a statement.

“In particular, energy-intensive sectors cut back their production.”

Sectors such as chemical and paper production declined sharply, the ministry said.

For the whole of 2022, industrial output was 0.6 percent lower than the previous year, Destatis said.

Moscow’s invasion of Ukraine and subsequent move to slash crucial gas exports has hit Germany’s export-oriented economy hard, as manufacturers had long relied on cheap Russian energy imports.

Berlin has rolled out relief measures, including a cap on energy prices, that have helped to blunt the crisis.

Sky-high inflation has started easing, some indicators suggest a downturn might not be as bad as feared, and the government has forecast the economy will dodge recession for 2023 as a whole.

But yesterday’s figures rang alarm bells anew.

“This is a simply horrible report,” said ING economist Carsten Brzeski.

“Despite the recent return of optimism as illustrated by improving sentiment indicators, the sharp drop in new orders, the inventory build-up in recent months and the lagged impact of high energy prices all still bode ill for the short-term outlook.”