GERMAN industrial production declined for a fourth straight month in August, official data showed today, adding to signs that Europe’s largest economy will end the year in a recession.

Output fell by 0.2% on the month before, according to adjusted figures from statistics agency Destatis, following a drop of 0.6% in July.

Analysts surveyed by FactSet had predicted a smaller dip of 0.1%.

The August disappointment was driven by a 6.6% fall in energy production and a 2.4% fall in the construction sector. 

There was better news for the automotive sector, where output increased by 7.6%.

Germany’s crucial industrial sector has been facing a series of headwinds in recent months, as inflation and high energy prices combined with a weakening Chinese economy take their toll on the export powerhouse.

The German economy tipped into a recession at the start of the year and stagnated in the second quarter.

A string of weak economic data since then has added to fears of a prolonged downturn.

Germany’s manufacturing output remains “very subdued”, said Capital Economics economist Franziska Palmas. 

“And we expect further drops in the coming months.”

The International Monetary Fund has forecast that Germany will be the only major advanced economy to shrink in 2023.

The country’s leading economic institutes expect GDP to contract by 0.6% this year.

The German Economy Ministry will unveil its own forecasts on Wednesday. – AFP, October 9, 2023.