German industrial output falls more than expected in March

BERLIN (Reuters) – German industrial production fell more than expected in March as pandemic restrictions and war in Ukraine disrupted supply chains, making it difficult to fill orders, official data showed on Friday.

The Federal Statistics Office said industrial output fell 3.9% on the month after a downwardly revised increase of 0.1% in February. A Reuters poll had pointed to a fall of 1.0% in March.

The last time there was a sharper decline was at the beginning of the coronavirus crisis in April 2020, it said.

Commerzbank chief economist Joerg Kraemer said that, due to weakness in industry, the German economy is likely to stagnate in the second quarter, despite easing pandemic restrictions.

“The economic environment remains exceptionally difficult,” said LBBW economist Jens-Oliver Niklasch.

On the supply side, high raw material prices and supply chain disruptions are making life difficult for industry, while inflation and the war weigh on the demand side, Niklasch added.

Industry, excluding energy and construction, saw output fall 4.6% in March, according to the statistics office.

Industrial companies received 4.7% fewer orders in March – the sharpest monthly fall since last October – driven mainly by a reduction in orders from abroad.

(Reporting by Miranda Murray and Rene Wagner; editing by Riham Alkousaa and Jason Neely)