German industrial production falls in June sequentially, real GDP likely to have grown in Q2

As was widely anticipated, German industrial production dropped in June on a sequential basis. On the month, industrial production dropped 1.1 percent. Despite this decline, production grew in the second quarter at the pace of 1.7 percent on the quarter, even more than in the very solid first quarter. It is thus possible that real GDP also grew solidly again in the second quarter.

The figures seem disappointing. Despite excellent business confidence and the recent rise in order intake, industrial production dropped in June by 1.1 percent on the month, with output having dropped in the manufacturing sector and also construction.

When production growth in May was surprisingly solid, this was not in agreement with the fairly sluggish rate at which orders had been moving for many months, stated Commerzbank in a research report.

This discrepancy has been corrected with the drop in June, and June industrial production almost exactly corresponds to the trend value calculated based on order intake in the past months. Since this trend is now indicating a bit upwards again, production should continue to rise slowly in the months ahead. In the second quarter, German industrial production grew at a pace of 1.7 percent, despite the decline in June.

The second quarter report was a bit better than the first quarter. This implies that real GDP also grew markedly again, stated Commerzbank.

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