Output at German Factories Dropped 0.5%

Exports fell 0.5% as well

German industrial output and exports fell in March, data showed May 8, as a stronger euro, weaker global demand and high raw material prices left their mark on Europe's largest economy. Until recently, economic data and sentiment indicators suggested that Germany was weathering well the prevailing headwinds in the world economy but this new data added to growing evidence that this may not be the case.

Figures from the economy ministry for example showed that output from German factories dipped 0.5% from February, the first monthly fall since November, while February's rise was adjusted downwards to mere 0.2%. The main culprit was a 12.3% slump in construction activity as a result of a mild winter which meant that the usual spring bounce in building activity was not forthcoming, the ministry said.

On a two-monthly basis -- comparing February and March to December and January -- production rose a more respectable 0.6%, and for the whole of the first quarter output was up 2.3%.

Analysts at Moody's say the data was a sign that demand for German goods is falling, forecasting industrial output growth will slow from 6.9% last year to just 3% this year.

Exports are the motor of the German economy but another set of numbers released on May 9 suggested that weaker demand abroad and a stronger euro -- which makes eurozone goods less competitive -- are taking their toll. Data from the statistics agency showed that German exports fell 0.5% in March from February.

Copyright Agence France-Presse, 2008

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