German industrial production slumped in September, official data showed Thursday, dashing hopes of a quick rebound and adding to the gloom over Europe’s powerhouse economy.
Industrial output dropped by 0.6 percent month-on-month, federal statistics authority Destatis said, wiping out August’s gain of 0.4 percent.
Analysts surveyed by Factset had expected a smaller dip of 0.4 percent in September.
Manufacturing firms fared worst, seeing a drop of 1.3 percent, in the latest sign of weakness among Germany’s export-oriented companies.
The figures come a day after a surprise jump in German industrial orders offered a glimmer of hope in a country that is only narrowly expected to avoid tipping into recession this year.
“Today’s industrial production data shows that any optimism on the outlook for German industry is premature,” said ING Diba bank analyst Carsten Brzeski.
“Even in case of some easing of the current trade conflicts and an end to the Brexit uncertainty, it will probably take until the first quarter of next year to see a significant rebound of German industry.” The only bright spot in the data came from a strong rebound in the construction sector where output was up 1.8 percent.
“So far, we only know that industry is in recession but not necessarily the entire economy,” Brzeski said.
“As so often, it will be the export sector, which decides on the fate of the German economy in the third quarter. Stay tuned.” Germany’s economy shrank by 0.1 percent in the second quarter, with third quarter figures due on November 14.
The government expects just 0.5 percent growth for 2019.