Germany Heads for a Technical Recession

This economic slowdown is not unique to Germany but has been spreading across the EU.

By Wolf Richter of WOLF STREET

OK, this is embarrassing in the land of super-stimulus via the ECB’s negative-interest-rate policy and years of QE that were supposed to perform miracles: Production in Germany’s industry, which includes construction, dropped 1.9% in November from the prior month (seasonally adjusted), the German statistical agency Destatis reported this morning. This drop is also embarrassing because economists polled by The Wall Street Journal had expected a 0.3% gain.

The agency also downwardly revised October, to a monthly decline of 0.8%. This makes three months in a row of declines. In November, compared to a year earlier (adjusted for inflation and calendar differences, but not for seasonality), the production index dropped an ugly 4.7%:

Production was down in all major segments, including energy and construction which are focused on Germany itself, rather than exports.

On a monthly basis, seasonally adjusted:

  • Industrial Production excluding energy and construction: -1.8%
  • Production of capital goods -1.8%
  • Production of intermediate goods: -1.0%
  • Production of consumer goods: -4.1%
  • Energy production: -3.1%
  • Construction: -1.7%

Industrial production is a big power in the German economy. And the trend is not good. Germany’s GDP already declined in the third quarter:

The declines in production in October and November put Germany a step closer to “negative economic growth,” as it’s called euphemistically, for two quarters in a row. If this occurs, it would be a technical recession

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