FRANKFURT (MktNews) - German seasonally adjusted industrial production plunged unexpectedly in October, hit by a larger-than-normal number of holidays during the month, the German Economics and Labour Ministry said Monday.
German seasonally adjusted industry output fell 2.1% m/m in October (after an upwardly revised -0.6% m/m in the previous month), with the annual rate falling to -1.4% from -0.7% in September, according to MNI calculations. The drop was below all forecasts in an MNI survey, with most analysts expecting a small rise on the month.
The German Economics and Labour Ministry said the data were hit by a larger-than-normal number of holidays this Oct. that were not fully accounted for by seasonal adjustment. However, the ministry made no comment on possible revisions to the October data.
Regardless, it is clear that the fourth quarter got off to a much weaker start than most had expected. The October industrial production index (109.7) fell to its lowest level since January 2000 and stood 2.1% below the 3Q average, according to Market News calculations.
Forward-looking German industrial indicators are mixed, at best. The sharper-than-expected rise in manufacturing orders in October, suggests that production should pick up in coming months. But while the manufacturing PMI index rose in November, it remained below 50, pointing to continued contraction in the sector. And while the Ifo survey's month-over-month production sentiment index rose in November, it remained negative, while the survey's production plans index continued to decline.
The plunge in German production will also have large negative impact on the eurozone production figure for the month. Excluding construction -- the measure used by Eurostat to calculate eurozone industrial production -- German industry output also dropped 2.1% m/m in October (after -0.7% m/m in September). All German industry output categories registered declines in October, led by the manufacturing industry, where output fell 2.1% m/m, after a 0.5% m/m drop in September.
Within manufacturing, consumer non-durable goods production registered the steepest fall, down 3.2% m/m in October (after -1.0% m/m in September), while production of consumer durables fell -2.5% m/m, erasing a 2.2% m/m gain in the previous month. Basic and semi-finished goods production fell 2.8% m/m, reversing a +1.0% gain in the previous month. Investment goods production declined 0.8% in October after a 2.2% m/m decline in September, possibly suggesting that the drop in that category is slowing.
Construction output fell 0.3% m/m in October after a 0.4% m/m decline in September, despite the hoped-for boost from rebuilding of flood-ravaged eastern Germany. Energy goods output fell 2.9% m/m in October, after a 0.8% m/m drop in September. In west Germany, industrial output fell a seasonally adjusted 2.1% m/m in October, after falling 0.5% m/m in September, while in the east production fell 0.9% after falling 1.7% m/m in September. //marketnews.com