German Industrial Output Drops Most in More Than Two Years

(Bloomberg) -- German industrial production declined the most in more than two years in September as Europe's biggest economy ran into summer weakness.

Production, adjusted for seasonal swings, fell 1.8 percent from the previous month, when it rose a revised 3 percent, data from the Economy Ministry in Berlin showed on Tuesday. The reading, which is typically volatile, was the biggest drop since August 2014 and compares with a median estimate for a 0.5 percent decline in a Bloomberg survey of economists. Output was up 1.2 percent from a year earlier.

Coupled with the unexpected drop in factory orders in September reported on Monday, the figures confirm the Bundesbank's view that the German economy slowed in the third quarter. Recent data signal the weakness was probably temporary, with business confidence climbing to the highest level in more than two years, manufacturing gathering pace, and unemployment dropping to a record low.

The ministry said the soft September data was partly attributable to the timing of holidays. Factors including a high level of construction orders and the improvement in sentiment indicators signal a revival in output in coming months, it said.

Industrial production dropped in all categories in September, according to the report. Energy output slid 3.1 percent and output of investment goods dropped 2.4 percent. Manufacturing fell 1.7 percent, consumer goods were down 1.9 percent and construction output slipped 1.5 percent.

Separate figures published Tuesday showed German exports dropped 0.7 percent in September and imports fell 0.5 percent. Initial estimates of the nation's economic growth are due to be released on Nov. 15.

--With assistance from Andre Tartar Kristian Siedenburg and Catherine Bosley To contact the reporter on this story: Piotr Skolimowski in Warsaw at pskolimowski@bloomberg.net. To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jeff Black