German industrial production drop is two times greater than expected

German industrial production has fallen by 1.0 per cent in May, from a 2.0 per cent rise in the month before (revised up from 1.8 per cent growth).

Analysts had been predicting a decline of just 0.5 per cent.

Jennifer McKeown, senior European economist, Capital Economics:

May’s German industrial and trade data are a blow to hopes that a strong recovery in the euro-zone’s largest economy might soon pull the region out of recession.

It confirms that competitive German exporters are not immune to the effects of weak demand elsewhere in the euro-zone and a still strong exchange rate. In all, while Germany is on the road to recovery, we doubt that the recovery will be strong enough to provide a meaningful boost to peripheral economies’ exports or to pull the euro-zone average into positive territory for some time.