German industrial output likely to have grown 1.1 pct in June

Germany’s industrial production is likely to have grown in June. It recorded solid growth in the year's beginning; however, it has been quite muted in the second quarter.

The country’s industrial output is expected to have increased 1.1 percent on a sequential basis in the month of June, said Societe Generale in a research note. The expected rise in June is predominantly due to recovery in manufacturing production.

Construction is also expected to have contributed positively to industrial output after declining for three months. Therefore, the industrial output is likely to have declined by 1 percent quarter-on-quarter in the second quarter of 2016 as compared to the first quarter. This would be a major drag on the German GDP growth.

But, even with relatively modest expansion in the third quarter, the contribution is expected to swing back to strongly positive, stated Societe Generale. Therefore, much of Brexit effects are unlikely to be seen in the third quarter. In all, the German economy is likely to be resilient to the Brexit effect with the solid domestic fundamentals, according to Societe Generale.