German industry loses ground: ministry

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German industrial output dropped unexpectedly in December, the government said Tuesday, as brutal winter weather took a heavy toll on construction activity in Europe's top economy.

Output dropped 1.5 percent compared with the previous month, the economy ministry said, citing provisional data. In November, output was down 0.6 percent, a slight upwards revision from minus 0.7 percent.

Analysts surveyed by Dow Jones Newswires had forecast a fall of 0.3 percent but Berlin said the figures were a minor setback and that industry should quickly recover its ground.

"Industrial production was severely impaired by a decline in construction activity due to the weather," the ministry said in a statement.

"On the other hand, the trend in industrial production remains positive and should maintain the same strength in the last quarter of the year as shown in the period before."

Construction activity was down 24.1 percent in December, a month marked by heavy snow and bitter frost in Germany.

Following a crippling recession in 2009, where output shrank by 4.7 percent, the German economic powerhouse has registered a stunning turnaround, with estimated growth of 3.6 percent in 2010.

The government has forecast an expansion of 2.3 percent this year and 1.8 percent in 2012.

But some worrying warning signs are beginning to emerge from industry. On Monday, data showed that industrial orders plunged 3.4 percent in December, partially erasing a gain of 5.2 percent in November.

© 2011 AFP

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