World Economy

German Industry Output Lowest in 2 Years

German Industry Output Lowest in 2 YearsGerman Industry Output Lowest in 2 Years

German industrial production posted its steepest fall in 23 months in July, data showed on Wednesday, in a further sign that Europe’s largest economy is set for a slowdown.

Wednesday’s data, published one day after a surprisingly weak rise in industrial orders, added to concerns that the German economy is losing steam as lower demand from emerging markets such as China and concerns about the consequences of Britain’s decision to leave the EU are weighing on exports, Reuters reported.

“Companies in the industry sector continue to adopt a wait and see approach because of sluggishness in the global export markets,” the economy ministry said in a statement.

ING economist Carsten Brzeski said it was impossible to link stagnating industrial output to one single factor, adding: “The trend already started long before the British referendum but clearly the Brexit vote should have been one of the main drivers behind the sharp July drop.”

He said: “More generally speaking, the German industry seems to suffer from weaker activity in China, struggling eurozone peers and a general shift away from manufacturing towards services.”

Industrial output fell by 1.5% on the month, the data showed, confounding the consensus forecast in a Reuters poll for an increase of 0.2%.

A 1.8% rise in output in the construction sector and a surge of 2.6% in energy output were not enough to offset a 2.3% fall in manufacturing, the data showed.

“All in all, this is more proof that the manufacturing sector is no longer a driver of growth in a world that is increasingly dominated by services,” said Nordea Bank analyst Holger Sandte.