Just day after President Trump suggests Germany is a currency manipulator, and as Merkel looks set to lose her Chancellorship, Europe's powerhouse economy just collapsed in December. Industrial production plunged 3.0% MoM in December - the biggest drop since Jan 2009 and over 8 standard deviations below expectations.
As Boomberg details, the figure excluding construction, which is comparable to the industrial production data reported by Eurostat, declined by an even greater 3.1%. The contraction was largely driven by capital goods, which subtracted 2 percentage points from the headline figure.
However, the losses were somewhat broad-based -- the categories of non-durable consumer goods, intermediate goods and energy all subtracted from the headline figure.
For some context, this was 8 standard deviations below market expectations of a 0.3% rise...
The contraction in December will leave industry’s impact on 4Q GDP growth close to neutral. Germany is the first of the euro area’s four largest economies to report industrial production data for December.
Furthermore, Europe’s largest economy, the region’s growth driver, faces a series of risks that may damp output in the coming months. Protectionist trade policies under the new U.S. administration and complicated negotiations about the U.K.’s post-Brexit relationship with the European Union threaten to weigh on sentiment, just as a national election in September pits Chancellor Angela Merkel’s ruling party against a strengthening populist movement.