German Production Down Unexpectedly Getty

German Industrial Output Unexpectedly Falls First Time This Year

With strong orders pointing to a likely pickup in manufacturing, the report is unlikely to mark a turning point for the German economy. Business confidence is at a record high and the Bundesbank sees growth continuing, even as momentum at the start of the third quarter lagged behind that of France, Italy and Spain for the first time in more than 12 years.

German industrial production unexpectedly slipped in June as manufacturing and construction caused a temporary blip in the growth spurt of Europe’s largest economy.

Output, adjusted for seasonal swings and inflation, fell 1.1% in June after rising 1.2% in May, the Economy Ministry in Berlin said on August 8.

That’s the first drop in six months in the typically volatile measure, which compares forecasts for a 0.2% gain. 

Production was up 2.4% from a year earlier.

With strong orders pointing to a likely pickup in manufacturing, the report is unlikely to mark a turning point for the German economy. Business confidence is at a record high and the Bundesbank sees growth continuing, even as momentum at the start of the third quarter lagged behind that of France, Italy and Spain for the first time in more than 12 years.

“Factory orders, as well as indicators for business climate point to the upward trend in industrial production, continuing,” the ministry said.

The decline in industrial output was driven by a 1.4% drop in manufacturing output, according to the report. Construction fell 1%.

A release on August 4 showed German factory orders jumped in June, driven mainly by broad-based domestic demand. The Economy Ministry said this points to another slight revival in industrial production going forward.

By Carolynn Look

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