German production unexpectedly slides

(Sharecast News) - German production unexpectedly fell in February, official data showed on Thursday, as Europe's biggest economy came under pressure even before the outbreak of war in the Middle East. According to Detatis, the Federal Statistics Office, production in industry fell 0.3% month-on-month, compared to 0.0% in January. Economists had expected to see a 0.9% rise.

Year on year, production was unchanged at 0.0%.

Leading the decline was the construction industry - which was down 1.2%, in part due to the cold winter weather - as well as the electronics and pharmaceutical sectors, which saw 3.9% and 4.4% declines respectively.

In contrast, however, exports staged a strong rebound during the month. Destatis confirmed exports had spiked 3.6% month-on-month, while imports jumped 4.7%, both comfortably ahead of forecasts. The trade surplus narrowed to €19.8bn, though it remains high by historic standards.

Carsten Brzeski, global head of macro at ING, said: "The war in the Middle East and soaring energy prices have again exposed the fact that Germany is one of Europe's largest net importers of energy.

"All-in-all, February's macro data shows that even without the war in the Middle East, the German economy was unfortunately on track for yet another quarter of contraction.

"To make things worse, the war - no matter how sustainable [the] ceasefire will prove to be - will leave clear marks on the German economy over the next few months.

"As much as we were hoping to finally comment on some good economic news from Germany, it is a bit like waiting for a German train these days: definitely delayed and uncertain whether it will ever arrive."