Germany’s industrial output fell 1.4 percent and exports from Europe’s top economy dropped by one percent in June from the previous month, data showed yesterday, reports AFP. Many German companies are struggling with China’s slowdown and recent volatility over the Greece crisis, despite the benefits of a low euro, cheap oil and rock-bottom interest rates. “Overall, today’s data is a setback for the German economy and bodes ill for second-quarter real GDP growth,” said Natixis bank, which revised down slightly its forecast to 0.4 percent GDP growth quarter-on-quarter. UniCredit also lowered its forecast for the second quarter GDP figure to be released next Friday to 0.4 percent, from 0.5 percent, although it called the output drop “a statistical fluke.” Industrial production, adjusted for seasonal swings and inflation, unexpectedly fell 1.4 percent over the month, with a particularly severe 4.5 percent drop in construction output, said the economy ministry. Analysts polled by financial services provider FactSet had forecast a small increase of 0.4 percent. Economists at BayernLB blamed the Greece crisis and the effects of an earlier major train strike for the disappointing figure and predicted a recovery, given a recent rise in factory orders. The economics ministry said an unfavourable working-day effect artificially dampened industrial activity. Capital Economics stressed that June’s figures were “unlikely to signal the start of a sustained contraction in German industry.” “The jump in industrial orders in June points to stronger production growth ahead. Nonetheless, the performance of the country’s growth engine has been disappointing in light of the boost expected from the decline in the euro exchange rate,” said Jonathan Loynes, Capital’s chief European economist. The industrial production figure for May was revised to 0.2 percent growth compared to April, against zero percent reported earlier. Germany’s trade surplus narrowed to 22 billion euros ($24 billion) in June, according to seasonally adjusted figures released by federal statistics office Destasis. Exports fell one percent to 101.1 billion euros from a month earlier, while imports contracted by 0.5 percent to 79.1 billion euros. For the first six months of the year, however, the trade data looked better — German gross exports reached nearly 600 billion euros, up seven percent from the first half of 2014. Other European Union member nations remained the biggest market for German exports. But the rise was most marked to non-euro EU countries, where exports grew 8.5 percent in the first half, and to other world regions, where they increased 8.2 percent overall. The weakness of the single currency against the dollar reduces the cost of European products for foreign buyers.
