Germany industrial production falls twice as sharply as expected in June

Industrial sector activity in the euro area's growth engine, Germany, slowed twice as sharply as expected in June, as factory and construction sector output cooled.

In seasonally and calendar-adjusted terms, industrial production volumes were down by 0.9% month-on-month in June, according to the Federal Office of Statistics.

Consensus had been for a smaller decline of 0.5% versus May.

Year-on-year, output was ahead by 0.5% on a calendar-adjusted basis.

May's reading for total industrial poduction was revised lower by two tenths of a percentage point to reveal a jump of 2.4%.

Within manufacturing, metals output fell by 1.3% month-on-month, that of Chemicals and Pharma by 0.7% and that of Machinery and Equipment by 0.4%.

By sectors, manufacturing output fell by 0.8% on the month while that of construction shrank by 3.2%, even as energy output shot 2.9% higher.

Commenting on Tuesday's figures for industrial production, Iaroslav Shelepko at Barclays Research said: "This could be a first sign that concerns about trade war are holding activity back. Motor vehicles and other transport equipment suffered the biggest fall, supporting this hypothesis.

"Notably, these negative effects materialized in the data, despite tight labour market conditions and anticipated fiscal stimulus."

Just the day before, Barclays cut its projections for the quarterly rate of growth in German GDP for the third and fourth quarters of 2018 to 0.4% and 0.5%, respectively, down from the 0.6% it had penciled-in previously.

That had followed the release of figures showing a 4.0% drop month-on-month in German factory sector orders in June.