German factory output slumps sixth straight month of decline

German industrial production unexpectedly fell in November, official data has shown, the sixth straight monthly drop and the latest sign of weakness for Europe's top economy.

Output slipped 0.7 percent on the previous month, after a revised fall of 0.3 percent in October, federal statistics agency Destatis said on Tuesday.

Analysts surveyed by financial data firm FactSet had forecast stagnation in November.

Key sectors including motor vehicles, electrical equipment and pharmaceuticals all registered declines, the economy ministry said.

Some areas saw growth, including mechanical engineering and energy-intensive sectors such as chemical and metal production, it said.

The ministry warned that a "rapid turnaround" in factory output was not expected, although it added it would likely recover over the course of the year.

Technical recession

ING economist Carsten Brzeski said that the "nearer-term picture of German industry gives very little reason for optimism.

"With a soft or hard landing of the US economy and still very little positive growth momentum in China, external demand for German industrial production is likely to remain weak."

He said recent data pointed to a contraction of the economy in the fourth quarter, which would mean Germany had fallen into a technical recession — defined as two-quarters of consecutive contraction.

The economy shrank 0.1 percent in the third quarter.

Surging inflation

Europe's traditional industrial powerhouse has been struggling since early 2022 with surging inflation — particularly of energy costs — weakness in key trading partners like China and rising eurozone interest rates.

For the whole of last year, the German government expects the economy to have shrunk by 0.4 percent.

The International Monetary Fund believes Germany will be the only major advanced economy to contract in 2023, acting as a drag on eurozone growth.