German industrial output slips
German industrial production unexpectedly fell in May, official data showed Friday, raising fears of a prolonged downturn in Europe's top economy.
Output in the manufacturing powerhouse slipped by 0.2 percent compared to the previous month, seasonally adjusted figures from federal statistics agency Destatis showed.
Analysts surveyed by financial data firm FactSet had forecast the indicator would come in almost flat.
The German economy fell into recession at the turn of the year, weighed down by surging inflation and aggressive interest rate hikes.
ING economist Carsten Brzeski warned the latest data indicated that "German industry is still stuck in stagnation".
"It needs an activity surge in June to avoid an extension of the recession," he said.
The fall in production came after an increase of 0.3 percent in April.
May's figure was affected in particular by a seven-percent decline in the energy sector.
Energy prices have surged since Moscow invaded Ukraine and slashed supplies to Germany, which had previously relied heavily on Russian gas.
The manufacture of pharmaceuticals also slumped by about 13 percent.
But there was better news from the key auto sector, with the manufacture of motor vehicles rising almost five percent, according to Destatis.
The economy ministry sought to strike an upbeat tone, despite the negative data.
"The recent stabilisation of demand points to a recovery -- albeitmoderate to begin with -- in the industrial economy in the coming months," it said in a statement.
But Brzeski warned that gloomy indicators in the past two months "have not taken away the risk of a further contraction of the German economy".
The German economy shrank by 0.3 percent in the first quarter of 2023, after a 0.5-percent contraction in the final quarter of 2022.
Two straight quarters of contraction meets the technical definition for a recession.
Comments