German industrial output drops unexpectedly

German industrial production dropped in June, disappointing analysts, who had penciled in a small growth rate. Output fell by 1.1 percent in the month under review, compared with May this year when production rose markedly by 1.2 percent, the National Statistics Office, Destatis, reported Monday.

Capital goods makers saw their output drop by 1.9 percent in June, while producer goods production was down 1.2 percent. Consumer goods output declined by 1.7 percent, Destatis said.

Don't panic

Industrial production is closely watched by analysts as a strong indicator of a country's economic health.

But despite the drop in June, "the business situation in industry continued to revive in the second quarter," the German Economics Ministry said in a statement.

It noted that production only dropped in June after five consecutive months of increases. "Industrial orders and indicators for the business climate in Germany suggest that the upward trend in industrial production will continue," the ministry said.

Output rose by 1.8 percent for the whole of the second quarter, compared with the first three months of the year.

hg/jd (Reuters, AFP)