German manufacturing drop raises concern for year-end chill

German industrial output posted its steepest drop in more than a year in September, raising concerns that Europe’s biggest economy may feel a year-end chill from a slowdown in emerging markets.

The second straight fall in production, on the back of a sharp decline in industrial orders in September, prompted several economists to scale back forecasts for German growth.

Following their 1.1% drop in industrial production, economists at JP Morgan also cut third-quarter growth forecasts for the broader eurozone.

Other data for September, published yesterday, showed France’s trade deficit widened further, but Spain reported a bigger rise in industrial output than any analyst polled had forecast.

Despite the drop in output in Germany, several economists remained upbeat, noting that business surveys suggested weak data may mark a temporary summer blip rather than the start of a prolonged slowdown.

“The latest data do not herald a fundamental turnaround in the German economy. It is a bump in the road and nothing more,” said Unicredie chief economist, Andreas Rees.