German economy hit by surprise slowdown
German industrial output dipped unexpectedly in August for the third time in as many months, data showed on Monday, suggesting Europe’s largest economy lost steam in the third quarter.
Data from the Economy Ministry showed industrial output fell 0.3 per cent in August, confounding a Reuters forecast for a rise of 0.4 per cent. It followed a fall of 1.3 per cent in July, itself a downward revision of an earlier, stronger number.
Jennifer McKeown, economist at Capital Economics, said the weak reading, combined with a recent downturn in retail sales, indicated the economy had not sustained its strong start to the year.
“August’s 0.3 per cent fall in German industrial production is much weaker than expected and suggests the economy is very unlikely to match the second quarter’s 0.5 per cent expansion in the third quarter,” she said.
Economists are taking an increasingly pessimistic view of the German economy, with the top German institutes last month revising down their 2018 growth forecast and warning that an escalation of trade friction involving the United States could cause a major recession in Germany and Europe.
A source said the government will revise down its growth forecasts for this year and next. The government is expected to announce its updated growth projections on Thursday.