BERLIN, October 7 (Reuters) – German industrial production fell far more than expected in August due to supply chain disruptions that are slowing the growth of Europe’s largest economy and hitting the automotive sector particularly hard, official data showed Thursday.

The Federal Statistical Office said industrial production fell 4.0% on the month after rising 1.3% in July. A Reuters poll had indicated a drop of 0.4% in August.

“Manufacturers continue to report production constraints due to shortages in the supply of intermediate products,” the agency said in a statement.

Production of cars and auto parts fell 17.5% on the month.

German automakers have struggled to meet increased post-pandemic demand since the start of the year due to a lack of microchips and other intermediates.

Official data released on Wednesday showed German industrial orders fell more than expected in August on weaker demand from abroad after two months of unusually strong gains from major contracts.

However, the Munich-based economic institute Ifo separately said its survey of production expectations rose in September.

“The order books are always full, only the bottlenecks of the materials pose problems for the moment and slow down somewhat the production plans”, declared the economist of Ifo, Klaus Wohlrabe.

Thomas Gitzel, economist at VP Bank, added that “if the flow of materials picks up again, the conditions are ripe for a strong recovery in industrial activity”.

Reporting by Paul Carrel and Klaus Lauer; Editing by Riham Alkousaa and Maria Sheahan

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