German industrial production dives deeply in May

Industrial production in Germany during the month of May fell sharply, diving below market expectations following a significant decline in capital goods output. However, this indicated that the country's industry has already lost momentum after a strong start to the year.

German industrial production, adjusted for seasonal swings and calendar effects, fell 1.3 percent in May from the preceding month, while market had anticipated a minimal decline of 0.1 percent, data released by the Ministry of Economics showed Thursday.

The drop in overall industrial production comprised a 1.8 percent m/m decline in manufacturing output, as capital goods production plunged 3.9 percent from the preceding month, the data showed.

Further, the ministry expects industrial production to resume its pace in the upcoming future, pointing deliberately to a slight pickup in business sentiments over the recent months. The optimistic view comes despite warnings by the country’s businessmen of possible Brexit risks that will pressurize investor sentiments.

Despite a slight optimistic view on the German industry, the unexpected economic fallout from Britain‘s vote last month to exit the European Union, is expected to have repercussions for the entire EU.