FRANKF\PURT (MktNews) - German industrial production fell more than expected in December, down a seasonally adjusted 2.6% m/m, pulling fourth quarter industrial production into negative territory, the Economics Ministry reported Monday. The monthly \Pdecline in industrial output was at the low end of individual forecasts in a Market News International survey of analysts and below the median expectation of a drop of 1.0% m/m.
The December data underscore the weak state of German industrial\P, with production having fallen in three of the last four months of 2002. Output dropped 1.3% m/m in October and 0.8% in September. Indeed, 4Q industrial production fell 0.6% q/q, reversing a rise of the same magnitude in 3Q, according to Ma\Prket News calculations based on data from the Economics Ministry. This will put a further drag on 4Q GDP, which is already teetering on the brink of being negative, given weak consumer and investment spending and an expected slowdown in net exports\P due to the weak global economy and stronger euro exchange rate.
Excluding construction, German 4Q industrial output fell 0.7% q/q, following a gain of 0.8% in 3Q. The ex-construction data are used by Eurostat to compute the eurozone industria\Pl production figures. The sharp drop in December manufacturing orders, combined with continued subdued Ifo and PMI confidence indicators, suggests that industrial output will remain weak in the coming months. On an annual basis, indus\Ptrial output fell 0.5% in December, after rising 2.4% y/y in November, according to MNI calculations. The November annual rate had been the first positive reading since June 2001. The Finance Ministry made no comment on possible revisions of \PDecember industrial output data, though it did say that calendar effects had a negative impact on the December result.
In December, most industrial output categories fell, led by a 5.8% m/m contraction in construction production that more tha\Pn erased the 3.8% gain the month before. Manufacturing output fell 2.7% on the month in December, wiping out most of the 2.9% gain the month before. Within manufacturing, capital goods output fell 4.2% m/m, erasing the 4.4% gain seen in Nove\Pmber. Semi-finished goods production was down 2.5%, offsetting the 2.1% gain in November, while consumer non-durables inched down 0.1% m/m in December, compared to a 1.8% gain the month before. Only consumer durables output, +1.2% after +2.3\P% in November, and energy output, +1.0% after -4.2% the month before, rose in December. Excluding construction, industrial output fell 2.4% m/m in December, after +2.3% m/m in November. In west Germany, industrial output fell a season\Pally adjusted 2.8% m/m in December, after rising 2.7% in November. In the east, production fell 0.9%, after rising by 0.5%.//www.marketnews.com