Given the weaker-than-expected read on October factory orders that landed with a resounding thud earlier this week, it comes as no surprise that industrial production numbers out of Germany were dour on Friday.
What is somewhat surprising, though, is just how dour.
Output slumped 5.3% YoY in October. That, folks, is the worst print in a decade. Try sugar coating this:
Intermediate goods production rose 1.0%, while capital goods production dropped 4.4% MoM. Construction output fell 2.8%.
“The economic downturn in the industry continues”, the economic ministry said, flatly, before adopting an upbeat tone to assess the outlook: “However, recent developments in new orders and business expectations indicate that there may be a stabilizing trend in the coming months”.
Maybe, but this latest news clearly suggests that the risks to Q4 are to the downside. That, after the economy barely dodged a technical recession in the third quarter.
Will the quickest pace of IP deterioration since the crisis be enough to light a fire under Berlin’s fiscal hawks in a fractious political environment?
Probably not. Germany is going to ride this one out.
Just like everybody else, they’re hoping the old “it’s always darkest before the dawn” adage holds.