Germany's industrial production unexpectedly decreased in January and exports were unchanged, underpinned mainly by demand from outside the European Union, suggesting that the slowdown in the biggest euro area economy continued at the start of the year.
Industrial production decreased 0.8 percent month-on-month in January, preliminary data from the Federal Statistical Office showed on Monday, while economists had predicted a 0.5 percent gain.
A 9.2 percent slump in the automobile industry influenced the January outcome, the Economy Ministry said. However, production shutdowns due to model changes as well as supplier strikes and, special factors contributed to the sharp decline.
Energy output rose 3.6 percent and construction grew 0.2 percent.
December's industrial production outcome was revised from a 0.4 percent decline to a 0.8 percent gain.
Production in industry excluding energy and construction was down by 1.2 percent from the previous month.
Capital goods output fell 2.5 percent and intermediate goods production decreased 0.7 percent. Consumer goods output rose 1.5 percent.
On a year-on-year basis, industrial production decreased 3.3 percent in January, in line with expectations. In December, production shrunk 2.7 percent.
In the December to January period, production was down 0.3 percent from the previous three months. Industrial output fell 0.4 percent and construction shrunk 0.2 percent.
"Given the decline in production in January and the weak leading indicators, it is still expected that economic activity will be subdued," the ministry said.
"In order to make a positive contribution to overall economic growth in the first quarter, industrial production would have to increase by at least 1.1 percent over the next two months."
Separate data from the FSO showed that after calendar-and-seasonal adjustments, exports were unchanged from the previous month in January after a 1.5 percent increase in December. Economists were looking for a 0.5 percent decline.
Imports grew 1.5 percent monthly after a 0.7 percent gain in December. Economists had expected a 0.10 percent fall.
On a year-on-year basis, exports were 1.7 percent higher and imports grew 5 percent.
Demand for German goods from non-EU countries jumped 3.3 percent year-on-year in January and imports from these countries surged 6.5 percent.
Exports to the EU rose 0.6 percent and imports grew 3.7 percent. Shipments to the euro area increased 1 percent and imports from the bloc were 4.7 percent higher.
The non-adjusted trade surplus was EUR 14.5 billion versus EUR 14.3 billion in December. Economists had expected a EUR 15.2 billion surplus.
The calendar-and-seasonally adjusted trade surplus was EUR 18.5 billion in January.
The current account surplus shrunk to EUR 18.3 billion from EUR 23.1 billion in December. Economists had predicted a EUR 18 billion surplus.
The statistical office also reported on Monday that labor costs grew 2.3 percent in 2018 after rising 2.7 percent in the previous year.
In the fourth quarter of 2018, labor costs fell 0.1 percent on a seasonal and calendar basis, marking the first decline since the second quarter of 2016.
The statistical office attributed the fall to the relatively small number of staff on sick leave in the fourth quarter of 2018, which increased the number of hours worked.
"Strong revisions of monthly data, tentative signs of domestic orders stabilizing and still solid fundamentals suggest that the current volatility is merely a sign that?the slump in?German industry is reaching a nadir," ING economist Carsten Brzeski said.
"But if the?search for a bottom takes too long, the German government should start considering additional fiscal stimulus."
