German industrial output fell much more than expected in December, economy ministry figures showed on Friday following orders data that pointed to prolonged decline well into 2009.
Output by German companies declined by 4.6 percent from November, much worse than an average analyst forecast of a 3.0 percent drop compiled by Dow Jones Newswires for the biggest European economy.
It was the biggest monthly decline since records for a reunited Germany began in 1991.
UBS economist Martin Lueck said German industry was in the midst of an "ice age," and added that the country was the one "with the biggest risk of a sharp rise in unemployment."
"Many companies, especially in the machinery, automobile and chemicals industries, Germany's most important export sectors, have seen no other way than closing down plants and sending employees on short time work," Lueck said.
On a 12-month basis, output declined by 7.5 percent in December, a ministry statement said.
"Although 'hopes' for a stabilisation of the economy and the industrial sector have risen lately, the outlook for the immediate future remains very grim," said analyst Alexander Koch of UniCredit Research.
"The latest order data definitely do not suggest a quick stabilisation in output. The once comfortable order backlog has vanished into thin air in only a few months."
On Thursday, ministry figures showed industrial orders down 6.9 percent in December from the previous month, more than twice the expected level.
For the full year 2008, orders for goods from Germany, the world's leading exporter, plunged by 25.1 percent as the global economic slowdown slammed its main trading partners.
Elsewhere in Europe, official figures showed that December manufacturing output in Britain fell at the fastest pace in about 27 years.
Output tumbled by 2.2 percent in December from November and was down 10.2 percent on a 12-month basis to record the biggest annual drop since 1981, the Office for National Statistics (ONS) said in a statement.
Production declines were also reported in Denmark and Hungary while output edged up slightly in Norway.
A traditional strong point of the German economy, machine tool production, was among the sectors that showed the biggest decline.
Output of intermediate goods, products later incorporated into finished goods, dropped by 8.2 percent on a monthly basis, while that of investment goods such as factories, machinery and other equipment, was down by 4.9 percent.
"In light of continued strong decline of demand for industrial products, one should expect the weak trend to continue in the coming months," a ministry statement warned.
Capital Economics economist Jennifer McKeown said that "weak global demand has pushed the eurozone's largest economy into a very deep recession."
She estimated that German gross domestic product might have contracted by a record 2.2 percent in the fourth quarter of 2008, "which would be the worst outcome of any major economy since the onset of the crisis."
Output by German companies declined by 4.6 percent from November, much worse than an average analyst forecast of a 3.0 percent drop compiled by Dow Jones Newswires for the biggest European economy.
It was the biggest monthly decline since records for a reunited Germany began in 1991.
UBS economist Martin Lueck said German industry was in the midst of an "ice age," and added that the country was the one "with the biggest risk of a sharp rise in unemployment."
"Many companies, especially in the machinery, automobile and chemicals industries, Germany's most important export sectors, have seen no other way than closing down plants and sending employees on short time work," Lueck said.
On a 12-month basis, output declined by 7.5 percent in December, a ministry statement said.
"Although 'hopes' for a stabilisation of the economy and the industrial sector have risen lately, the outlook for the immediate future remains very grim," said analyst Alexander Koch of UniCredit Research.
"The latest order data definitely do not suggest a quick stabilisation in output. The once comfortable order backlog has vanished into thin air in only a few months."
On Thursday, ministry figures showed industrial orders down 6.9 percent in December from the previous month, more than twice the expected level.
For the full year 2008, orders for goods from Germany, the world's leading exporter, plunged by 25.1 percent as the global economic slowdown slammed its main trading partners.
Elsewhere in Europe, official figures showed that December manufacturing output in Britain fell at the fastest pace in about 27 years.
Output tumbled by 2.2 percent in December from November and was down 10.2 percent on a 12-month basis to record the biggest annual drop since 1981, the Office for National Statistics (ONS) said in a statement.
Production declines were also reported in Denmark and Hungary while output edged up slightly in Norway.
A traditional strong point of the German economy, machine tool production, was among the sectors that showed the biggest decline.
Output of intermediate goods, products later incorporated into finished goods, dropped by 8.2 percent on a monthly basis, while that of investment goods such as factories, machinery and other equipment, was down by 4.9 percent.
"In light of continued strong decline of demand for industrial products, one should expect the weak trend to continue in the coming months," a ministry statement warned.
Capital Economics economist Jennifer McKeown said that "weak global demand has pushed the eurozone's largest economy into a very deep recession."
She estimated that German gross domestic product might have contracted by a record 2.2 percent in the fourth quarter of 2008, "which would be the worst outcome of any major economy since the onset of the crisis."
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