Debt Crisis Hits German Industrial Output in June

Manufacturing was down 1%.

Industrial output in Germany declined in June, as the debt crisis increasingly makes itself felt on Europe's biggest economy, official data showed on Wednesday.

Industrial production declined 0.9% in June compared with May, the economy ministry said. That was more or less in line with expectations.

Construction output fell by 2% in June and manufacturing output was down 1%.

Energy output, on the other hand, rose 1.2%, the data showed.

In May, output rose 1.7% month-on-month.

The weak output data adds to the growing gloom over Germany, which had long seemed to be spared the worst of Europe's long-running debt crisis.

Just a day earlier, factory orders showed a bigger-than-expected fall of 1.7% in June as the eurozone's woes weigh on demand.

"June's German industrial production figures provide further evidence that the overall economy is likely to have tipped into recession in the second quarter," said Capital Economics economist Jonathan Loynes.

The June decline left production down by around 0.3% in the second quarter overall, following a drop of 0.1% in the first quarter, the economist argued.

Furthermore, business surveys pointed to much steeper rates of contraction over the coming months.

"With the supposedly ultra-competitive German manufacturing sector in recession, the omens for the rest of the eurozone economy are extremely worrying," Loynes warned.

Natixis economist Constantin Wirschke similarly believed that "the future trend for industrial production does not look rosy. After a very weak April and June, industrial production in the second quarter is below the levels seen in the first quarter."

The eurozone crisis "is having increased adverse effects on the German economy, even though Germany still displays a level of robustness unmatched in the single currency area," Wirschke said.

Copyright Agence France-Presse, 2012

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