German industrial production dropped for the sixth straight month in November, likely indicating the country entered a recession in the final quarter of 2023, Bloomberg reported on Tuesday, citing data from Germany’s Federal Statistical Office.
Production slid 0.7% from October, driven by a slowdown in output of capital goods and intermediate goods as German factories struggle amid a downturn in global demand, particularly from China, high interest rates, and expensive energy, the figures showed.
“Disappointing November production data and the recent business expectations deterioration point to a bumpy start to the year for industry. We maintain our baseline view for a slight GDP increase in the first quarter of 2024, driven by a higher dynamic in the service sectors. There is substantial risk, however, that a more pronounced industry weakness will drag the economy down again in 1Q24,” Bloomberg’s economists wrote.
Analysts say that the EU’s largest economy likely slid into recession at the end of last year, as they expect the data, which is due for release on January 15, to reveal a second straight contraction in industrial output in the fourth quarter of 2023.
The industrial output figures come a day after a report was released showing that German factory orders rose much less than anticipated in November. Orders were up by only 0.3%, well below analyst expectations of a 1.1% increase.
Analysts say that even if the German economy does manage to start expanding this year, persisting industrial and budgetary woes will hamper a recovery from the country's weakest annual performance in a generation.
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