German industrial production softens in July, but underlying trend in production seems strong

The German industrial production data came in weaker than expected for the month of July. The industrial production growth remained unchanged in July after having dropped by 1.1 percent sequentially. But the softness in the print was focused mainly in the energy sector, while manufacturing output rose by 0.3 percent sequentially and construction activity rose 0.5 percent sequentially after two straight months of declines.

Looking through the monthly volatility, the underlying trend in the overall production seems to be strong – on a three-month basis, the rate of 1 percent three-month on three month was respectable, albeit the lowest in five months, while the annual rate of 4 percent year-on-year, up from 2.7 percent year-on-year in June, and not too far off from over five-year high reached in May, was strong, stated Daiwa Capital Markets Research.

“Indeed, the annual rate of German manufacturing growth (4.6 percent Y/Y) tallies with recent survey evidence that business conditions in that sector have rarely been better since reunification”, added Daiwa Capital Market Research.

At 22:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at 38.2717, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -73.0247. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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