German industrial production sinks unexpectedly in May

German industrial production fell sharply in May, raising fresh concerns about second-quarter growth prospects for Europe's biggest economy.

Output in Germany slumped by a bigger-than-forecast 1.3 per cent in May after expanding by 0.5 per cent in April, the Economy Ministry said Thursday. Analysts had predicted a 0.1-per-cent rise in May.

Adding to the worries about the German economic outlook, the ministry said it had revised the April growth figure downwards, from an originally estimated 0.8 per cent.

The contraction in industrial production in May comes as Germany faces up to the expected economic fallout from Britain's vote last month to exit the European Union, which is expected to have repercussions for the entire EU.

"Today's industrial production data have increased the risk of a hard landing of the German economy in the second quarter," said ING Bank economist Carsten Brzeski.

But despite the May fall in output, the Economy Ministry was optimistic about the outlook for German industrial production saying it "should resume its moderate upward trend after a slightly weaker performance in the second quarter."

The drop in industrial production in May was led by a 1.8-per-cent fall in manufacturing output and a 3.9-per-cent plunge in the production of capital goods.

German industrial production was down 0.4 per cent in May compared with the same month a year earlier.

Last update: Thu, 07/07/2016 - 12:42
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