German industrial output falls more than expected in July

BERLIN (Reuters) -German industrial production fell by slightly more than expected in July, the federal statistics office said on Thursday, underlining the challenges faced by the sector after a winter downturn in Europe’s largest economy.

Production fell by 0.8% in July compared to the previous month. Analysts polled by Reuters had predicted a 0.5% decline.

“Dark clouds continue to hang over industry,” said Alexander Krueger, chief economist at Hauck Aushaeuser Lampe.

“The weak global economy and high energy prices will keep the outlook gloomy. On the production side, it already looks like another quarterly loss,” he added.

In the less volatile three-month comparison, production between May and July was 1.9% lower than the previous three months, the data showed.

Germany’s manufacturing sector has had a difficult year so far due to dwindling orders, sluggish output and high prices, with the HCOB final Purchasing Managers’ Index (PMI) for manufacturing falling for a sixth consecutive month in July.

Industrial production (manufacturing excluding energy and construction) decreased by 1.8% in July compared to June, while the production of capital goods fell by 2.9% and the production of consumer goods decreased by 1.0%, the data showed.

Jens-Oliver Niklasch of LBBW said Thursday’s data underscored “the continued crumbling of the economy” and predicted the third quarter would bring a decline in economic output.

The office offers more detailed data on its website.

(Writing by Friederike Heine; Editing by Maria Sheahan and Christina Fincher)