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German Industrial Slowdown Continues, Raising Doubts On Rebound


Germany's industrial production unexpectedly decreased for a fourth consecutive month in December, dragged down by a slump in construction, raising doubts on a possible rebound in the near term.

Industrial production fell a calendar and seasonally-adjusted 0.4 percent from November, when it decreased 1.3 percent, preliminary figures from the Federal Statistical Office showed on Thursday.

Economists had expected a 0.8 percent increase for December. November's decline was revised from from 1.9 percent reported initially.

"In view of declining order intake and subdued sentiment indicators, the industrial economy is likely to continue to develop subdued," the economy ministry said.

Data released on Wednesday showed that factory orders unexpectedly decreased for a second straight month in December and at a faster pace, on the back of weak demand from abroad.

Excluding major bookings, factory orders climbed 3.5 percent from the previous month, signaling that the current situation was not so depressing.

Energy production was unchanged from the previous month, while construction output shrunk 4.1 percent.

The slowdown in construction continued in January, despite order books remaining robust, mainly due to severe bad weather, survey results from IHS Markit showed on Wednesday.

Construction growth slowed to a three-low in January, led by the worst decline in almost six years in commercial activity, according to the survey.

The latest purchasing managers' survey from IHS Markit showed that the manufacturing sector shrunk in January, marking the weakest level in 50 months.

Excluding energy and construction, production grew 0.2 percent from the previous month after a 1.5 percent slump in November.

Capital goods output rose 0.9 percent, while production of intermediate goods decreased 0.4 percent and consumer goods output fell 0.5 percent.

Automobile sector output jumped 7.2 percent, the economy ministry noted.

In the fourth quarter of 2018, industrial production decreased 1.5 percent year-on-year amid contractions in both industry and construction, the ministry added.

On a year-on-year basis, industrial production fell 3.9 percent after a 4 percent slump in November, revised from 4.7 percent. Economists had expected a decrease of 3.3 percent. Production dropped for a second straight month after October's 0.5 percent increase.

"Manufacturing still does not present itself in a good condition," Commerzbank economist Ralph Solveen said.

"Nevertheless, the German economy is likely to have grown slightly in the fourth quarter."

Germany likely avoided a technical recession in the fourth quarter, the economy ministry has said. Average annual growth slowed to a five-year low of 1.5 percent in 2018.

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