RTTNews - German industrial output unexpectedly declined in April mainly on account of plunging capital goods production.

A report released by the Federal Ministry of Economics and Technology showed that manufacturing output fell 1.9% month-on-month in April, reversing a revised 0.3% rise in March. Economists were expecting a monthly increase of 0.3%.

Production of capital goods and intermediate goods were down 6.4% and 1%. On the other hand, energy production rose 5.8%, after declining 5.5% in March, while construction output growth slowed sharply to 0.5% from 6%.

In the two-month comparison, manufacturing output slipped 2.3% from January and February. Construction output showed a considerable growth of 7.3% during March to April, while all other sectors reported decreases in production.

Year-on-year, manufacturing output plummeted by working-day adjusted 21.6% in April versus 20.2% decline seen in March. April's 21.6% decline was bigger than the 20.5% fall expected by economists. On an unadjusted basis, output slipped 26.7%, severe than March's 12.1% fall.

Factory orders stagnated in April after rising in March for the first time since August 2008. On Monday, the ministry said the outlook noticeably improved in the medium term. The latest unchanged order activity and the positive result of the previous month increased the chances of stabilizing the demand for industrial products.

Ralph Solveen, a Commerzbank analyst said nosedive in industrial production would come to an end in the months ahead. Even then, everything points to a further economic contraction in the current quarter by around 1% over the previous quarter. He said the nosedive is not over yet, but is losing considerable momentum as the rising leading indicators suggest.

Earlier in the day, the statistical office reported a larger contraction in German exports in April due to the ongoing weakness in global demand. Exports declined 28.7% annually to EUR 63.8 billion and imports fell 22.9% to EUR 54.4 billion, resulting in a surplus of EUR 9.4 billion.

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