German industrial production dropped in February 2016 by 0.5%

German industrial production dropped in February 2016 by 0.5% month-on-month seasonally adjusted basis. The decrease is with slowest-than-expected pace, after lowering global trade forced factories in European largest economy to cut production despite strong domestic demand. The German industrial production climbed a revised 2.3% in January. The index, which is usually volatile, surprise interviewed by the agency economists, who had expected a decline of 1.8% on a monthly basis. Compared to February 2015, industrial production was up by 1.3%.

The data highlight the challenges facing German industry after February factory orders unexpectedly shrank and the central bank of Germany warned that weakening demand from China and other emerging markets may impair the growth momentum in the second quarter of 2016.

Against this background, in March confidence among business improved, but unemployment remains historically low – signal that the economy remains healthy. Construction increased by 1.3% compared to January, while production of intermediate goods for use are up 0.1%. Investment goods were down by 1%, with as fall and consumer goods. The industrial production declined by 0.5%, while electricity production was lower by 1.8% compared to last month.

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