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[BERLIN] Germany's industrial output fell 1.4 per cent and exports from Europe's top economy dropped by one per cent in June from the previous month, data showed Friday.
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 per cent GDP growth quarter-on-quarter.
UniCredit also lowered its forecast for the second quarter GDP figure to be released next Friday to 0.4 per cent, from 0.5 per cent, although it called the output drop "a statistical fluke." Industrial production, adjusted for seasonal swings and inflation, unexpectedly fell 1.4 per cent over the month, with a particularly severe 4.5 per cent drop in construction output, said the economy ministry.
Analysts polled by financial services provider FactSet had forecast a small increase of 0.4 per cent.
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.
The industrial production figure for May was revised to 0.2 per cent growth compared to April, against zero per cent reported earlier.
Germany's trade surplus narrowed to 22 billion euros (US$24 billion) in June, according to seasonally adjusted figures released by federal statistics office Destasis.
Exports fell one per cent to 101.1 billion euros from a month earlier, while imports contracted by 0.5 per cent 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 per cent 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 per cent in the first half, and to other world regions, where they increased 8.2 per cent overall.
The weakness of the single currency against the dollar reduces the cost of European products for foreign buyers.