German Industrial Output Unexpectedly Falls First Time This Year

(Bloomberg) -- 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 percent in June after rising 1.2 percent in May, the Economy Ministry in Berlin said on Monday. That's the first drop in six months in the typically volatile measure, which compares forecasts for a 0.2 percent gain. Production was up 2.4 percent 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 in an emailed statement.

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

A release on Friday 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.

--With assistance from Kristian Siedenburg Catherine Bosley and Joshua Robinson

To contact the reporter on this story: Carolynn Look in Frankfurt at clook4@bloomberg.net.

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Fergal O'Brien at fobrien@bloomberg.net, Jana Randow, Zoe Schneeweiss