German industrial output is down, raising recession concerns
Industrial production across the board in Germany has fallen by 1.9% in November, signalling that Europe’s largest economy is slowing down.
German industrial output has fallen 1.9% in November for the third consecutive month, according to data released by the Federal Statistics Office on Tuesday.
The news adds weight to the argument that Europe’s second largest economy could slip into a recession as trade tensions between the US and China, Brexit and a global economy in decline begin to take its toll.
‘A simple mapping between industrial production and German GDP growth points to recession (even assuming a December rebound),’ Chief Economist (Europe) at Bloomberg Economics Jamie Murray tweeted.
Don’t ‘badmouth’ the German economy
But despite the data supporting economists’ assertions that the German economy may slide into recession; such claims have angered the country’s economy minister Peter Altmaier.
During an interview with ARD TV, Altmaier chastised those that have spoken ill of Germany’s economic performance of late, insisting that the economy remains healthy.
‘As economy minister, my role is not to badmouth the good current economic mood but to contribute so that there are more investments in Germany and new jobs are created,’ he said.
A ‘technical recession’ is nothing to worry about
Despite fears of a German recession mounting and Tuesday’s industrial production data increasing the likelihood of an economic downturn, private and public consumption still have the ability to offset the slump, according to ING economist Carsten Brzeski.
‘Even a technical recession should be nothing to be too worried about,’ he said. ‘It should be technical, without any significant marks on the labour market.’
‘In fact, there are still plenty of reasons to remain optimistic, even for German industry: despite the recent deflation of new orders, order books are still richly filled and companies still report assured production close to record highs and while capacity utilisation has dropped to its lowest level since the third quarter of 2017, the lack of equipment still is a more limiting factor to production than the lack of skilled workers,’ he added.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
See an opportunity to trade?
Go long or short on more than 17,000 markets with IG.
Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.
Live prices on most popular markets