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Bundesbank Report Says German Economy Shrank In Q1

Germany's economic output decreased in the first quarter as activity was dampened in all sectors, the latest monthly report from Bundesbank said Monday.

Industrial production continued to fall in February. "Supply bottlenecks for raw materials must have played an important role in the decline, so that there were production delays despite the good order situation," the report said.

While stricter and longer-lasting lockdown restrictions worsened the losses in several firms in the service sector, a renewed increase in VAT rates and exceptionally harsh weather in January and February led to a sharp reduction in construction output, the report said. However, incoming orders meant the slump may not last long.

The report also said that the short-time work rose sharply in January, by 40 percent from October before the coronavirus restrictions were tightened again. Consequently, employment remained stable at the beginning of the year and the unemployment rate was steady at 6.0 percent.

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