German industrial output drops 1.4% in September

German industrial production dropped much more than expected in September, according to figures out Tuesday from the federal statistics office Destatis.

Output was down 1.4% on the month, falling for the fourth straight month, dragged lower by a 5% drop in production in the automotive industry.

Falls in the manufacture of electrical equipment (-4.4%) and in the pharmaceutical industry (-9.2%) also had a negative impact on overall performance, Destatis said.

The 1.4% slump followed a revised 0.1% decline in overall industrial production August and was well below the 0.1% fall expected by analysts.

Year-on-year, production was down 3.7% in September, much worse than the 1.9% annual decline seen the month before.

Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said that Tuesday's data suggests a downward revision to the third-quarter GDP growth figures for Germany, with initial estimates already showing a 0.1% quarter-on-quarter contraction.

"[This] is likely and bode ill for the last quarter of the year. The carry-over for Q4—if output holds steady at September’s level—points to a near 1% fall in the fourth quarter and downside risks to our forecast for GDP to stagnate at the end of the year."