Germany’s industrial production logged the biggest decline in nearly two years in May, largely due to weak construction and capital goods output.
Industrial output fell 1.3 percent month-on-month in May, reversing a revised 0.5 percent rise in April, figures from Destatis revealed Thursday. Production was expected to climb 0.1 percent.
This was the biggest fall since August 2014, when output dropped 2.5 percent.
On a yearly basis, industrial production decreased 0.4 percent in contrast to April’s 0.8 percent increase and confounding expectations for a 1.5 percent growth.
The economy ministry said that there were less working days in May.
The ministry further said that after a somewhat weaker development in the second quarter, industrial production should continue its moderate upward trend.
Today’s figures are further evidence that the German economy has lost considerable momentum after its strong start to the year, and it will probably have achieved virtually no growth in the second quarter, Ralph Solveen, an analyst at Commerzbank, said.
ING Bank NV Economist Carsten Brzeski said the latest data only confirm the picture of a two-speed economy. With the ongoing stagnation of the industry, an economic model mainly based on consumption and services might eventually turn out to be too little for sustainable economic growth.
Excluding energy and construction, industrial production dropped 1.8 percent. Production of energy gained 3.9 percent, while that of construction decreased 0.9 percent.
Other elements of production, capital goods and intermediate goods registered 3.9 percent and 0.3 percent declines.
According to a survey conducted by the Association of German Chambers of Commerce and Industry (DIHK), companies are concerned about trade barriers and uncertainty after ‘Brexit’ vote.
German exports to the U.K. are forecast to fall 1 percent this year and 5 percent next year, the survey found. The survey was conducted among 5,600 companies in Germany.
The material has been provided by InstaForex Company – www.instaforex.com