German industrial production up for 3rd consecutive month

BERLIN (AP) — German industrial production increased for the third consecutive month in July, but the gain was relatively modest following bigger gains in the immediate aftermath of this spring’s shutdowns, official data showed Monday.

Production rose 1.2% compared with the previous month, the Economy Ministry said. That followed gains of 7.4% in May and 9.3% in June as activity in Germany, Europe’s biggest economy, recovered from big drops in March and April.

The ministry said that production has returned to nearly 90% of its level in last year’s fourth quarter, before the coronavirus pandemic hit.

The gain in July was well short of economists’ predictions of 4% or more. The reading was “certainly disappointing,” said Thomas Strobel, an economist at UniCredit bank in Munich.

Temporary effects such as summer vacations probably contributed, but “one major reason for the current slowdown certainly stems from Germany being highly dependent on foreign trade and global demand for its goods and services,” he added. Virus-related difficulties in countries outside the eurozone including the U.S., Britain and several emerging economies likely depressed German exports.

The data followed figures last week showing that factory orders were up 2.8% in July, slowing from gains of 10.4% in May and 28.8% in June.

The government said last week that the economy is performing better than expected following the easing of Germany’s coronavirus lockdown restrictions, which were less drastic than in some other European countries. It is now predicting that the economy will contract by 5.8% this year, a somewhat more optimistic outlook than the 6.3% it forecast in late April.