German industry hits the brakes as crisis begins to bite

7th October 2011, Comments 0 comments

German industry went into reverse in August, official data showed Friday, as indications grew that the eurozone debt crisis is beginning to affect the continent's biggest economy.

Industrial production contracted by 1.0 percent compared to the previous month, the economy ministry said, roughly in line with analysts' expectations.

The ministry also revised down fractionally the figures for July, saying that output had risen by 3.9 percent, compared to the 4.0 percent previously estimated.

Nevertheless, the ministry sought to put a gloss on the figures, saying that production rose by 2.8 percent when data from July and August were taken together and that August's result was due primarily to summer holidays.

"Despite the recent slight weakening, industrial production remains on a growth path," the ministry said in an accompanying statement.

However, it acknowledged: "Due to a dampening in industrial orders, the trend will soften somewhat."

Figures released Thursday showed that industrial orders had slowed by 1.4 percent in August, dragged down mainly by weak domestic demand, suggesting that the German economic powerhouse might have some tough times ahead.

Business confidence figures have also been increasingly gloomy recently, as Germany begins to slow after a stellar year in 2010 in which gross domestic product rose by 3.6 percent.

© 2011 AFP

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