German output plunges by 1.8%

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THE SHARP downturn in the German economy was underlined yesterday by a 1.8 per cent drop in industrial production in December and a decline in engineering orders.

The figures released by the economics ministry revised upwards the scale of the drop in November to 1.8 per cent, bringing the cumulative decline from last February's peak to nearly 10 per cent.

Though the figures refer to west Germany, the east German figures were scarcely better, showing a drop of 0.7 per cent in November from October after a rise of 5.3 per cent in October.

Nor does the inflow of industrial orders show any sign of touching bottom. Incoming orders for west German firms for plant and machinery fell by 9 per cent after allowing for inflation compared with December 1991, with a particularly sharp drop seen in domestic orders.

Taking the quarterly data, which are less affected by short- term fluctuations, total order inflow in October-December was 13 per cent lower than in the same period of 1991.

The German motor manufacturers' association VDA added to the gloom yesterday with a prediction that sales of cars and trucks in Germany would be nearly a third below last year's levels in the early months of this year.

However, hopes of a slight improvement in the latter half of 1993 led to predictions of an overall annual decline in domestic sales of around 20 per cent. Global sales and output of German cars are likely to drop by 10 per cent in 1993.

Achim Diekmann, managing director of the VDA, said that the 'unhappy situation' would lead to the loss of at least another 50,000 jobs this year among car producers and their main suppliers. This follows 50,000 job cuts in 1992.

At the same time the French car makers' committee CCFA said that total French car sales fell by 36.8 per cent in January compared with a year before.

After adjusting to account for differences in the number of business days, new car sales were down 30.4 per cent.

Peugeot Citroen sales in France fell 33.9 per cent in January from the same month in 1992, while Renault sales dropped 32.7 per cent, said the CCFA.

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