German industrial production unexpectedly falls in July, sparks recession fears

German industrial production fell by 2.4% in July, compared to upwardly revised 1.7% increase in June and strongly beat consensus for 0.4% decline, cooling expectations for economic recovery

Data released on Friday dampened hopes for faster economic recovery and raised fears of deeper downturn, which could drive the Eurozone’s largest economy into recession in the third quarter of 2024.

July’s slump was mainly driven by weakening activity in automobile production which dropped by 8.1% in July, compared to 7.9% fall previous month, while the other industrial sectors also showed a weaker performance, adding to darkening outlook.

The data also showed that sharp fall in July has more than reversed June’s increase, despite the upward revision of the figure.

Economists remain concerned about situation in the German industrial sector which does not show any signs of possible turnaround, but raising fears of contraction, with expectations that the economy will stagnate for the rest of the year, as trends in manufacturing, imports and exports still look recessionary.