Ger­man econ­omy hit by sur­prise slow­down

Yorkshire Post - Business - - MARKET REPORT -

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.

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