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Industrial production in Germany unexpectedly declined in May 2016

Industrial production in Germany unexpectedly declined in May 2016 and signaled that the crosswinds from the global economic slowdown and political uncertainty in Europe inhibit the activity. The seasonally adjusted data of the federal statistics office Destatis showed 1.3-percent contraction of production on a monthly basis. In comparison, in April there was an increase of 0.5%, while economics expected increase in industrial production by 0.1%. On an annual basis the decline amounted to 0.4%.

Usually the index of industrial production in Germany suffers from fluctuations. However, the current report reflects the challenges for German manufacturers. The signals of instability in the global economy is likely to be reinforced after the referendum in the UK, of which nearly 52% of voters backed out of the country by the European Union.

The contraction in industrial production in May 2016 was mainly due to the decrease in investment goods (-3.9%). The production of consumer goods grew by 0.5%, while intermediate goods is a decrease of 0.3%. The energy production in May increased by 3.9% on a monthly basis, while construction decreased by 0.9%.

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