German October industrial production falls unexpectedly

German industrial production unexpectedly fell by 0.4% in October compared to the previous month, according to official data published on Thursday.

The fall compared with expectations of a 0.2% rise, and was mainly due to a 0.6% decline in mechanical engineering sector output, the office said.

The data follows a shock fall in German industrial orders in October, down 3.7% on the previous month on a seasonally and calendar adjusted basis, data showed on Wednesday.

Outside of manufacturing, energy output jumped by 7.1% and construction slid by 3.4%.

“The carry-over—the change in the quarter if overall industrial output, including energy and construction, held steady at October’s level in November and December—points to a third quarterly fall in industrial production in Q4 of between 1% and 1.5%, after a 2% slide in Q3,” said Melanie Debono, senior Europe economist at Pantheon Macroeconomics.

“Business surveys, such as the manufacturing output PMI, point to a similar decline, despite rising in November. Forward-looking survey indicators, such as the new orders index, suggest the outlook remains bleak.”

“Note too that the fiscal impasse casts a cloud over the already-weak outlook for industry, with subsidies to chip makers, for example, currently up in the air.”

Reporting by Frank Prenesti for Sharecast.com