BERLIN - Agence France-Presse
German industrial production marked its biggest drop in almost 11 years in May, official data showed Monday, and analysts said Europe's biggest economy might have contracted in the second quarter of 2008.
Industrial production dropped by 2.4 percent from April, with the economy ministry saying its provisional, seasonally-adjusted figure was partly the result of two long weekends.
But "hard economic facts are now telling us what leading indicators have been signaling for some time: the German economy will not get away from slowing growth elsewhere," said Martin Lueck at UBS.
Postbank analyst Brian Mandt noted the drop was not only the third in a row, but "also the strongest minus since August 1997."
Capital Economics economist Jennifer McKeown said that despite the long weekends, "the work-day adjusted annual rate dropped to a three-year low of 0.8 percent - a far cry from the peak of over 8.0 percent reached earlier this year."
A breakdown of the data revealed a monthly decrease of 2.6 percent in manufacturing production and a 3.9 percent fall in the capital goods sector.
German companies had until now withstood weak conditions elsewhere by providing machines needed to produce finished products."The capital goods sector is now struggling, due to tightened credit standards, higher labour costs and the slow down of the global economy," said Costa Brunner at Natixis bank.