German industrial production extended its decline and contracted for a seventh straight month in December, highlighting the difficulties gripping Europe’s largest economy.
Manufacturing shrank by 1.6% in the final month of 2023, driven mainly by declines in chemicals and construction, the statistics office said on Wednesday. The decline was much steeper than the 0.5% forecast by analysts.
The overall level of output is currently the lowest since June 2020, and excluding the shock of the pandemic, the last time such a weak result was recorded was in 2010.
Germany faces the risk of a potential recession after output shrank 0.3% in the fourth quarter of 2023 and had a shaky start to the year. The data underscores the difficulty of reviving the economy amid weak global demand, high interest rates and the lingering effects of the energy crisis.
There were mixed signals earlier this week when data reported an unexpected rise in December factory orders, albeit only on large orders along with the continued decline in exports.
Consumer price growth slowed more than expected in January to 3.1%, and lower unemployment highlighted the surprising stability of the labor market.
However, Finance Minister Christian Lindner warned that Germany was struggling because of its failure to increase production.
