A general view shows the Volkswagen factory in Wolfsburg, Germany. Picture: REUTERS
A general view shows the Volkswagen factory in Wolfsburg, Germany. Picture: REUTERS

Berlin — German industrial production unexpectedly fell for the first time in 2017 in June, data showed on Monday, although it increased in the second quarter overall.

Output declined 1.1% on the month after rising 1.2% in May, the economy ministry data showed. Expectations in a Reuters poll were for a 0.2% gain.

But factories and construction firms in Europe’s largest economy produced 1.8% more in the April-June period than in the first quarter and the ministry said order levels, along with business climate indicators, pointed to the upward trend continuing.

"As unexpected as today’s drop in industrial production has been, the German economy is still on track to post another strong quarter," said ING Bank economist Carsten Brzeski.

But a scandal over diesel emissions and cartel allegations engulfing Germany’s vehicle industry could ultimately hurt the economy, he said, especially as cars make up about one-fifth of German exports.

The output data followed a run of upbeat economic indicators, painting a rosy picture of the economy that is likely to boost German Chancellor Angela Merkel’s chances of winning a fourth term in a national election on September 24.

Merkel’s conservatives, holding a 15-point lead over their Social Democrat (SPD) rivals in the latest poll, are brandishing their economic credentials after 12 years in government during which Germany has prospered.

The conservatives are campaigning on a platform of economic stability and more new jobs, pledging to ensure full employment by 2025 while the SPD — currently the conservatives’ junior coalition partner — is promising to invest more and ensure more social justice if it gets back into government.

Data published on Friday showed strong domestic demand pushed up industrial orders twice as much as expected in June, boding well for the sector’s output in the coming months.

Other recent data has shown business morale at a record high, unemployment falling, engineering orders increasing, the manufacturing sector growing and consumer morale rising.

A breakdown of Monday’s data showed energy output was the only bright spot in June, climbing by 1.4%, while manufacturers of intermediate, capital and consumer goods all churned out less than in May.

Reuters

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