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German drop in production

October 7, 2014

German companies have seen their output shrinking at a pace not seen in years. The Economics Ministry warns production levels will be low for the whole of the third quarter for a number of reasons.

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Machine tools workers
Image: picture-alliance/dpa

German firms slammed the brakes on production in August, the National Statistics Office, Destatis, reported Tuesday.

It said that industry, the building sector and energy utilities saw their combined output levels fall by 4 percent month-on-month, marking the steepest drop since January 2009.

Analysts polled by Reuters news agency had only penciled in a 1.5-percent drop for August, following a 1.6-percent rise in the previous month.

Gloom across the board?

"Cyclical developments in German industry are currently going through a phase of weakness," the Economics Ministry said in a statement, adding that the downturn was not only affecting output, but also order volumes and turnover.

The ministry warned that production levels overall would be disappointing for the whole of the third quarter.

Industry orders dropped by a bigger-than-expected 5.7 percent in August, Destatis reported. Makers of capital goods such as heavy machinery suffered the most from the current crisis, with their August output shrinking by a staggering 8.8 percent month-on-month.

hg/sgb (Reuters, dpa)