German industrial output dips on supply chain upsets

FRANKFURT: German industrial production dipped more than expected in April, official data showed Tuesday, as manufacturers grappled with semiconductor and timber shortages.

Federal statistics agency Destatis said industrial output fell one percent month-on-month in Europe's top economy, according to figures adjusted for seasonal swings.

Analysts surveyed by Factset had predicted a smaller drop of 0.5 percent.

Compared with February 2020, the month before the first coronavirus restrictions were imposed, April's output was 5.6 percent lower.

The economy ministry blamed the April upset, which comes after a 2.2 percent jump in industrial output in March, on "a shortage of producer goods, especially semiconductors and lumber".

Like many countries, export powerhouse Germany is struggling with a global computer chip crunch caused by a pandemic-fuelled surge in demand for home electronics.

Germany's crucial car industry has been especially hard hit by the supply chain woes, with giants like Volkswagen and BMW forced to temporarily trim production in the wait for semiconductors.

Timber is also in short supply on booming post-lockdown demand, which has spurred higher prices and production bottlenecks.

But analysts said the outlook for the German economy remains bright, given factories' full order books.

April's data suggests that "the rebound of the German, and also the eurozone, economy in the second quarter has started with shaky knees," said ING bank economist Carsten Brzeski.

"However, after some starting problems, the economic rebound should soon take off strongly."

A closely-watched German investor confidence survey released separately on Tuesday showed a similar picture.

The ZEW institute's monthly barometer of economic sentiment fell by 4.6 points to 79.8 in June, a slightly bigger drop than analysts had predicted.

But the indicator "remains at a very high level" overall, said ZEW president Achim Wambach.

"Financial market experts therefore continue to expect a strong economic recovery for the next six months," he added.

Economy Minister Peter Altmaier last week said he expected the German economy to grow up to four percent this year, raising an earlier forecast of 3.5 percent.