The latest industrial production figures came out for Germany this morning, and they aren't pretty.
Not since January 2009 has the Eurozone powerhouse suffered like this: a four per cent drop month on month and a 2.8 per cent drop year on year. Both measures were rising last month.
Expectations for the month-on-month data were negative (- 1.5 per cent).
These are dark days indeed for the Eurozone, with whispers abound that the currency bloc could be heading into recession. Italy is already there and France looks anemic.
Analysts at Berenberg economics said the impact of later school holidays played a role and that the trend was "overplayed":
Later-than usual school holidays caused car factory closures in August, triggering a large decline in German industrial output. Overall output fell by 4.0 per cent mom, significantly more than expected.
Capital goods production led the decline with a monthly drop by 8.8per cent, suggesting that the expected holiday effect may have been aggravated by below-average large-ticket capital goods production.
Similarly to the factory orders data for August, which was published yesterday, the August drop overstates the downtrend.
The year-on-year chart makes sobering viewing too: