German industry went into reverse in August, official data showed today, as indications grew that the euro zone debt crisis is beginning to affect the continent's biggest economy.
Industrial production contracted by 1% compared to the previous month, the economy ministry said, roughly in line with analysts' expectations. The ministry also revised down fractionally the figures for July, saying that output had risen by 3.9%, compared to the 4% previously estimated.
Nevertheless, the ministry sought to put a gloss on the figures, saying that production rose by 2.8% when data from July and August were taken together and that August's result was due mainly to summer holidays.
"Despite the recent slight weakening, industrial production remains on a growth path," the ministry said in an accompanying statement. However, it acknowledged: "Due to a dampening in industrial orders, the trend will soften somewhat."
Figures released earlier this week showed that industrial orders had slowed by 1.4% in August, dragged down mainly by weak domestic demand, suggesting that the German economic powerhouse might have some tough times ahead.
Business confidence figures have also been increasingly gloomy recently, as Germany begins to slow after a stellar year in 2010 in which gross domestic product rose by 3.6%.
