German industrial output unexpectedly contracts in March as Iran war squeezes manufacturers
Industrial output in Europe's largest economy unexpectedly fell in March, dashing hopes of a tentative manufacturing recovery. Auto and machinery makers continued to bear the weight of weak order books even as the energy sector held up. The data add pressure on the ECB to keep policy supportive amid Iran war fallout.
Germany's industrial output unexpectedly fell in March, the federal statistics office said, undercutting forecasts for a modest rebound. Economists had pencilled in a small monthly gain. Weakness was concentrated in auto, machinery and metal manufacturing.
The data weighed on euro-zone bond yields and underline the bind facing Berlin: the Strait of Hormuz crisis is keeping European energy costs elevated, while soft domestic demand is squeezing the export-driven industrial base. Energy-sector production was the lone bright spot, holding up as utilities ran flat-out to offset volatile gas markets.
The European Central Bank has held a cautious line on further easing, but a string of weak readings is feeding market bets that Frankfurt may have to reconsider its policy stance later in the year. The DAX edged lower in early trading after the release.
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