German Industrial, Trade Data Take Sheen off Growth-Engine Rep

Germany's ability to shoulder the eurozone growth burden was called into question on Tuesday with a second set of disappointing industrial data and lackluster trade figures.

The Federal Statistical Office said industrial output fell 1.8% month-on-month in September, worse than the 0.5% contraction expected, after a 3% increase in August, which the statisticians revised up from an initiate estimate of 2.5%. The decline was led by a 3.1% contraction in energy output and a 2.4% decrease in the production of capital goods.

The figures followed news Monday of a disappointing 0.6% contraction in the narrower gauge of factory orders, which analysts had expected to rise by 0.3%. And they came as the statistical office reported an unexpected narrowing in Germany's September trade balance as exports fell faster than imports. All the data is adjusted for seasonal fluctuations.

Taken together the reports dent the perception of relative economic strength in Germany after forward-looking purchasing managers' indices out last week suggested German growth would power fourth-quarter eurozone economic expansion of about 0.3%, unchanged from the third quarter. The October PMI data suggested Italian growth had stalled with France expanding only slightly after the eurozone's second-largest economy after Germany swelled by a modest 0.2% in the third quarter after a 0.1% contraction in the previous three months.

Tuesday's German trade data showed exports and imports contracted by 0.7% and 0.5%, respectively, in September from August, with the export decline slightly worse and the import decrease better than expectations. Compared with September 2015 exports were up 0.9% but imports were down 1.4%, with the notable drags on the figures including imports from other eurozone counties and exports to and imports from countries outside the 28-nation EU. The September trade surplus came in at €21.3 billion ($23.6 billion) compared with the €22.2 billion surplus the Federal Statistical Office had reported in August.

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