(Sharecast News) - German industrial production rose much less than expected in July, partly due to weakness in the construction sector, with output remaining well below pre-Covid levels.
According to figures released by Destatis on Monday, industrial production was up 1.2% on the month following a 9.3% increase in June, rising for the third month in a row but coming in well below expectations of a 4.5% jump. Production remained more than 10% lower than in February.
On the year, production fell 10% following an 11.4% decline in June.
Production in industry excluding energy and construction was up by 2.8%. Within industry, the production of intermediate goods was 4% higher, while the production of consumer goods increased 1.8% and the production of capital goods was up 2.1%. Outside industry, energy production fell 0.6% and construction production was down 4.3%.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "This is a weaker headline than we expected, and certainly a lot softer than implied by the new orders and survey data."
He said the headline was constrained in part by the plunge in construction output, following an upwardly-revised 2.3% increase in June.
"Overall, this data leaves us with a picture of a German manufacturing sector that is still far off making a full recovery. As of July, production remained 11% below its pre-virus level. The good news is that headline leading indicators suggest that the upturn will be sustained.
"Friday's new orders report was solid, implying further near term upside in the output growth, the surveys are turning up, and the daily truck toll index is also continuing its rebound. The only dark spot in the near term is that separate data from the automotive association, VDA, now warn that output in the auto sector fell slightly on the month in August, hitting production of capital goods."
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