In February, German manufacturing production experienced the steepest monthly decline in two years, according to figures from the Federal Statistical Office (FSO).
These show that manufacturing output in the euro-zone’s largest economy was down by 1.6% compared to the previous month, with the biggest decreases in capital goods (-3.1%), construction (-2.0%) and industrial manufacturing (-2%).
The FSO highlighted that industrial production — traditionally a key driver of German growth — had lost some of its earlier momentum in February, adding that “relatively high levels of outstanding orders and strong business confidence suggest that the sector will still experience further growth in the course of the year”.
The figures were far below most economists’ expectation of growth of around 0.3%.
Speaking to the Chinese news agency Xinhua, Thiess Petersen — senior economist at the Guetersloh-based Bertelsmann Foundation — said it was not unusual for production to fall temporarily, particularly during the winter months.
However, the decline was surprisingly large. It remains to be seen whether this is just a short dip, but it is worrying that other economic indicators have deteriorated as well.”
That said, according to the VDMA, which represents more than 3,200 companies in the SME-dominated mechanical and systems engineering industry in Germany and Europe, incoming orders in February for the mechanical engineering sector in Germany rose by 13% in real terms, compared with the previous year.
The VDMA said that while orders from domestic customers increased by 11%, foreign customers ordered 14% more than in the same month last year.
Orders from the euro partner countries increased by 10%, while orders from non-euro countries increased by 16%.
VDMA chief economist Ralph Wiechers said: “The demand for machines and systems of the highest quality continues to be high among our customers around the globe.
"We can only hope that the trade conflict between the USA and China will not do lasting damage to this good propensity to invest.”