German manufacturing, the locomotive of Europe''s largest economy, is running out of steam three years into the euro zone debt crisis, which has clobbered orders and output. Data on Wednesday showed output slid by 1.8 percent on the month in September, more than forecast and the sharpest drop since April. A day earlier, data had shown industrial orders fell 3.3 percent month-on-month in September.
Economic advisers to the government, traditionally known as the "wise men", said Germany''s economy would probably hit a low-point this quarter and grow just 0.8 percent this year and next, mirroring forecasts published by the European Commission on Wednesday.
"What''s really worrying is the economic development next year," said adviser Lars Feld after the panel handed its annual report to Chancellor Angela Merkel. "The downside risks to our forecast look greater than the upside ones, given current data." Industry accounts for a third of German gross domestic product (GDP). Other recent data has shown business sentiment worsening, the private sector contracting, joblessness rising and industrial orders falling at their sharpest rate in a year, though consumer morale has held up and exports have leapt.