German industry slides for fourth straight month

The news: German industrial output fell for the fourth month in a row as poor demand, worker shortages and high interest rates collided with lingering energy market issues to drag on Europe's biggest economy, Bloomberg reports.

The numbers: Construction and energy sectors led a 0.2% drop in production in August, which was worse than an expected 0.1% decline. Germany's GDP could shrink as much 0.6% in 2023, Bloomberg analysts said.

The context: Germany is the industrial powerhouse of the EU, and any slowdown in its economy tends to echoes in the Eurozone. Germany is facing a skilled labour shortage, with around 43% of the country's companies reporting a shortage of skilled workers in July, according to University of Munich's IFO Institute. Weakening demand from China, higher energy prices and tightening gas supplies as the Russia-Ukraine war continues are also causing headaches for German policymakers.

What they said: "Germany had built its economic model on very cheap energy supplies and on export opportunities, especially to China,” European Central Bank president Christine Lagarde told La Tribune Dimanche in an interview published on Sunday.