German Industrial Output Falls Unexpectedly Amid Virus Curbs By Bloomberg

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© Reuters. German Industrial Output Falls Unexpectedly Amid Virus Curbs

(Bloomberg) — German unexpectedly fell for a second month in February, suggesting that coronavirus restrictions are increasingly harming one of the economy’s most resilient parts.

Output dropped 1.6% from the previous month, surprising all but three economists in a Bloomberg survey. The decline was broad based, with investment-goods production taking a particular hit.

Still, the economy ministry expressed some optimism that growth momentum will pick up in the months ahead.

“The improvement in business confidence and positive trend in orders signal a positive outlook in industry,” it said. “Nevertheless, the future course of the pandemic poses uncertainties.”

German industry has held up relatively well in recent months as it benefits from economic recoveries in China and elsewhere. A separate release showed exports rose 0.9% in February.

At home, persistently high coronavirus infections have kept large parts of the service sector shut, probably resulting in a contraction in output in the first quarter.

Chancellor Angela Merkel has signaled she’d be in favor of another short, sharp shutdown lasting two to three weeks to contain the pandemic. With some regional leaders reluctant to even fully implement the current measures, she has threatened to transfer powers to the federal level to impose additional curbs.

Meanwhile, German business executives are confident their companies will overcome the crisis this year. According to a Deloitte survey of 140 chief financial officers at large firms, 43% have already seen sales recover, and another 23% say they will do so by December.

A separate report showed Thursday that rose 1.2% in February. The gain was driven by demand from within the country and the euro area, with that for investment goods especially strong. 

 

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