German industrial output fell a seasonally adjusted 0.2 per cent in August from the previous month, missing market expectations for a 0.1 per cent drop and marking the fourth consecutive monthly decline, which left the output index at its lowest level this year. The construction and energy sectors saw the biggest month-on-month declines in output.
Weak demand, labor shortages, high interest rates and lingering fallout from last year's energy crisis have hurt German industry, which in turn has a negative impact on the German economy as a whole. German gross domestic product is likely to contract 0.1 per cent in the third quarter and 0.6 per cent in 2023 as a whole.
European Central Bank President Christine Lagarde acknowledged that Germany's economic weakness is putting pressure on the entire European region. "The German economic model is based on very cheap energy supplies and export opportunities," Ms Lagarde said. "The ongoing adjustment in the German economy is affecting growth prospects in the euro area."