Belgium, (Brussels Morning Newspaper) German industrial production dropped more than expected in December 2022, largely due to lower output from energy-intensive industries.
Federal Statistical Office (Destatis) data shows a monthly decline of 3.1%, while economists who took part in a poll by Reuters expected a drop of 0.7%, the paper reported on Tuesday.
In energy-intensive sectors, a monthly decline of production stood at 6.1% in December, with ING Bank economist Carsten Brzeski pointing out that the energy crisis is taking its toll.
“The former growth engine of the German economy is stuttering and improvement is not really in sight,” he warned.
Last year, the German government called on companies and households to cut natural gas consumption 20% to help avoid shortages in the heating season.
Compared to average consumption in the period between 2018 and 2021, consumption of gas in the industry dropped roughly 15.4% in December. In the 12 months of 2022, industrial production dropped 0.6% on the annual level and was about 5% lower compared to pre-coronavirus crisis levels.
Claus Vistesen, a chief eurozone economist at Pantheon Macroeconomics consultancy, pointed out “this completes a miserable end to 2022 for Germany’s economy following the crash in retail sales and plunge in exports.”
The consultancy estimates that German industrial output dropped 0.7% in Q4 of 2022, with Vistesen predicting that Q1 of 2023 will be worse.
Decline was expected
German Ministry for Economic Affairs and Climate Action noted that decline of industrial production was expected in the heating season, but pointed out that surveys point to reversal of negative trends in the coming period.
The ministry stressed that order books are filling and supply chain bottlenecks are easing, which suggests that the winter economic slowdown was likely mild.
As industrial production dropped at the end of 2022, industrial orders were up 3.2%, exceeding expectations and reaching the highest level in the last year or so largely drive by recovery of demand in the eurozone.
According to the Federal Office for Economic Affairs and Export Control (BAFA), Germany imported roughly 9.4% more crude oil in the first 11 months of 2022 compared to the corresponding period in 2021.
The country’s crude oil imports bill increased 77.4% in the observed period, with BAFA pointing out that average price paid per tonne increased 62.3% and reached 699.8 euro.