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BERLIN, Feb 6 (Reuters) - German industrial output suffered a record fall in December, battered by a slump in manufacturing activity that likely condemned Europe's largest economy to its worst quarterly performance since the country reunified in 1990.
Adjusted for seasonal swings, output fell by 4.6 percent month-on-month and by 12.0 percent year-on-year, Bundesbank data showed on Friday. Both were record declines.
The monthly decrease was the fourth in succession, and was
bigger than the fall of 2.5 percent forecast in a Reuters poll
of economists last week
Carsten Brzeski, an economist at ING Financial Markets, said German firms had not become less competitive, but had been hit hardest by the downturn in world trade given their export focus.
"The financial crisis has pushed German industry into a condition of shock and awe. The conditions in the German industrial sector are deteriorating at an alarming rate. Even more worrying, the worst is yet to come," he said.
World Trade Organisation chief Pascal Lamy said in Berlin on Thursday global trade was in a "pretty terrible" state.
A government source told Reuters on Friday that German gross domestic product (GDP) probably contracted by up to 2 percent on the quarter in the final three months of last year.
A decline of 2 percent would easily be the country's worst quarterly showing since reunification. GDP will probably also contract perceptibly in the first quarter, the source added.
Given the slump in demand for manufactured products, industrial output was likely to remain weak for the next few months, the Economy Ministry said in a statement.
A breakdown of the latest output data showed manufacturing output was down by 5.3 percent, with energy production cut by 1.0 percent. Construction output rose by 1.4 percent.
Data from the Bundesbank published on Thursday showed German industry orders suffered their biggest annual fall in December since reunification, as demand for manufactured goods fell away sharply for the fourth month in a row.
The figures from Germany's central bank showed that, adjusted for seasonal swings, orders fell by 27.7 percent compared with December 2007, and by 6.9 percent month-on-month. (Reporting by Dave Graham)