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German industrial production drops in May

Xinhua, July 7, 2016 Adjust font size:

German industrial production fell in May, led by a drop in investment goods, official data showed on Thursday, adding signs that the German economic growth would slow down in the second quarter.

Compared with the previous month, production in German industry declined by 1.3 percent in May, following a downward-revised increase of 0.5 percent in April, according to German federal statistics office Destatis.

This was led by a drop in investment goods production which slumped by 3.9 percent. Consumer goods, meanwhile, gained 0.5 percent.

"Today's industrial production data have increased the risk of a hard landing of the German economy in the second quarter," said Carsten Brzeski, chief economist at ING-DiBa bank.

"While the domestic economy is booming, the former growth engines (exports and industrial production) are weakening. With weaker industrial production, a traditional increase in investment becomes also less likely," he added.

The German economy expanded by 0.7 percent in the first quarter of 2016, thanks to strong private consumption, government spending on integrating refugees and a boom in construction due to the mild weather.

However, economist expected that the economic growth would slow down in the second quarter as a usual spring recovery of construction would be subdued and foreign trade environment remained difficult. Endit