German Industrial Output Slides In January

World’s biggest exporter and Europe’s largest economy reported industrial production fell 7.5 percent in January.

FRANKFURT (AP) -- German industrial production fell 7.5 percent during January, as the global economic crisis continued to take its toll on the world's biggest exporter and Europe's largest economy.

The Economics Ministry said Thursday that the building sector and capital goods manufacturers saw particularly sharp drops in business from the previous month -- 7.8 percent and 12.3 percent -- as companies shied away from major purchases or expansions and foreign markets canceled or scaled back orders.

The ministry said consumer goods production also declined, by a more modest 0.4 percent.

"The recent numerous announcements of production cuts and temporary plant closures, above all in the automotive sector but increasingly also in other areas, impressively show up in the hard data," Alexander Koch, an economist at UniCredit, said in a note to clients.

"The gloomy situation in industry at the beginning of 2009 is being even exacerbated by adverse weather effects in the construction sector," he added.

Koch said further production cuts are likely in the short term and that business sentiment in most trading partner countries remains clearly recessionary, while inventories still remain high from 2008 production.

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