REUTERS/Phil Noble
German manufacturers took a dive in November.
- German industry went into a sudden and unexpected collapse in November. The data is so bad some economists think it might be wrong.
- Nonetheless, they agree that Germany may have been in a recession for the last two quarters of 2018.
- Germany is the largest economy in Europe and the fourth-largest on the planet. So this is bad.
Germany may be in recession, economists said, after they trawled through an unexpectedly horrible set of industrial and manufacturing data published on Wednesday's from the world's fourth-largest economy.
- German industrial production fell by -1.9% in November.
- Year over year, production hit a low of -4.6% - the biggest trough since the 2008 crisis.
- Germany's exports fell -0.4% month over month in November, the government reported today.
Oxford Economics
Suddenly, Europe is faltering.
Germany is the largest European economy and its leaders have an outsized influence on the rest of the EU and the European Central Bank. A recession in Germany could easily drag down France and Italy - and the latter country is already likely in a recession of its own. Greece is still struggling to recover from its debt crisis and neighbouring Turkey also dropped into a steep recession, triggered by the devaluation of its currency.
Here is what analysts are saying:
"Even if order books and backlogs of work still look good, Germany likely flirted with a technical recession in H2. We have revised our Q4 GDP forecast to 0.0%." - Daniel Harenberg of Oxford Economics.
"The decline was broad-based across sectors, with no bright spots: manufacturing fell by 1.8% m-o-m with the consumer goods sector once again being the major drag (-4.1% m-o-m vs. -3.3% in Oct.) ... Today's data were both bad and unexpected. A technical recession in German industry now seems likely." - Stefan Schilbe of HSBC.
"Germany likely was in recession in H2 2018 ... Yesterday's manufacturing data in Germany provided alarming evidence of a much more severe slowdown in the second half of last year than economists had initially expected. Industrial production plunged 1.9% month-to-month in November, driving the year-over-year rate down to a decade-low of -4.6%. The headline was hit by a perfect storm across all sectors." - analyst Claus Vistesen of Pantheon Macreconomics.
The collapse of German industry was so steep and so sudden that Vistesen told clients he almost doesn't believe the data: "The crash in the year-over-year rate is far in excess of anything remotely believable, at least using survey data as a yardstick," he told clients in a note seen by Business Insider.
Pantheon Macroeconomics