German output slumped in October and looked set to remain subdued throughout the fourth quarter, the Economy Ministry said yesterday, adding to fears of a slowdown in Europe’s largest economy which could plunge the eurozone deeper into recession.

Output fell by 2.6 per cent in October, a far steeper drop than the decline of 0.5 per cent forecast in a Reuters poll of 37 economists.

The ministry blamed weakness in durable and capital goods production for the fall.

Factories churned out 4.3 per cent fewer capital goods and produced 6.2 per cent fewer durable goods on a monthly basis. Activity in the construction sector slipped 5.3 per cent on the month. “The weaker order-intake of previous months is starting to show in industrial output. Production could fall notably in the fourth quarter,” said economist Juergen Michels at Citigroup.

“Decent Christmas trade and robust consumer spending won’t pick up the slack. The economy could shrink at the end of the year.”

September output data was upwardly revised slightly to a fall of 1.3 per cent, from a previous decline of 1.8 per cent.

Data showed industrial orders had risen 3.9 per cent in October. The economy ministry said that despite this rise output would remain subdued.