GERMAN industrial output fell by the most in more than two years in February and the sector is losing momentum, the Economy Ministry said, as factories in Europe’s largest economy throttle back in the face of the rising threat of protectionism.

Output fell by 1.6 percent after rising by a revised 0.1 percent in January, data from the Economy Ministry showed. February’s drop was the biggest since August 2015 and compared with a Reuters consensus forecast for a rise of 0.3 percent.

A breakdown of the data showed a big slump in the production of capital goods, down 3.1 percent on the month, with output of consumer goods falling 1.5 percent and intermediate goods down 0.7 percent. Construction activity was also weaker overall.

UniCredit economist Andreas Rees said the weakness across industries suggested a wave of flu might have hit production. The ministry said industry was losing some of its drive.

“Industrial production has lost momentum. However, the good orders situation and the positive mood among companies suggest the industrial sector will remain on an upward path,” the ministry said in a statement. “Growth momentum is nonetheless likely to be weaker than in the previous year.”

Official data showed industrial orders rose less than expected in February because of weak domestic demand.

The DIHK Chambers of Commerce and Industry struck a cautionary note, saying escalation of a dispute between China and the United States over import duties could harm the global economy and weaken demand for German goods and services.

“On the demand side, the main question is how the current trade conflict develops,” said Sophia Krietenbrink at the DIHK.

(SD-Agencies)