German output slumps as economic growth slows

Feb 7, 2012, 11:08 GMT

Berlin - German industrial production slumped in December as Europe's biggest economy slowed in the run-up to the end of last year, data released Tuesday showed.

The Ministry of Economics said output dropped by a bigger-than-forecast 2.9 per cent in December, after stagnating in November.

Analysts had expected the ministry to say production also stagnated in December, following expectations that the country's economy ran out of momentum in the final quarter, as the debt crisis undercut economic growth across Europe.

The German statistics office said last month that it expected data later this month to show the nation's economy shrank by about 0.25 per cent in the fourth quarter.

The December decline caused production to contract by 1.9 per cent in the fourth quarter compared with the three months to the end of September.

However, a steady stream of key indicators released this month has indicated that the German economy rebounded as it entered the new year.

'The stabilization of industrial orders, along with the pickup in economic sentiment indicators, are the first signs that the weak phase has been overcome,' the ministry said.

On Monday, the ministry said German factory orders jumped more than expected in December, boosted by a 12.3-per-cent surge in demand from nations outside the debt-hit 17-member eurozone.

Industrial orders rose by 1.7 per cent in December, from November when they contracted by 4.9 per cent. This beat analysts' forecasts for a 1-per-cent gain in December.

Still, quarter-on-quarter factory orders fell by 1.4 per cent during the three months to the end of December, the ministry said.

Leading the fall in the monthly output data for December was a 2.7-per-cent drop in manufacturing production and a 6.8-per-cent contraction in the building sector.