German industrial output posted its biggest fall in December since the depth of the financial crisis at the start of 2009, the Economy Ministry said on Tuesday, underperforming forecasts by a wide margin.
However, the ministry said improving industry orders, which rose more than forecast in December, and brighter sentiment indicators signaled that a phase of weakness in Europe's largest economy was coming to an end.
Output dropped 2.9 percent in December after remaining flat in November, missing even the lowest forecast in a Reuters poll of 37 economists that ranged from -2.5 to +1.0 percent and pointed to a median 0.3 percent fall.
It was the biggest drop in production since a 7.1 percent contraction in January 2009. The November reading was revised upwards from an originally reported 0.6 percent fall.
Due to the weak December figure, output in the fourth quarter as a whole tumbled by 1.9 percent from the third quarter, one of the reasons why Germany's economy contracted for the first time since early 2009.
Preliminary estimates from the statistics office show the economy contracted by 0.25 percent in the final three months of 2011. Fourth-quarter growth data are due on February 15.
Germany has been more resilient to the euro zone debt crisis than most of its peers but its economy slowed drastically at the end of last year. Economists expect it may return to healthy growth from the second quarter of the year.
(Reporting by Annika Breidthardt, editing by Gareth Jones)