(Bloomberg) -- German industrial production rose in June — offering some good news for Europe’s largest economy after it unexpectedly shrank last quarter.
Output increased 1.4% from May, surpassing the 1% median estimate in a Bloomberg survey of analysts. Cars and electrical equipment drove the advance, data Wednesday showed.
The reading follows a bigger-than-expected gain in factory orders in June, though other recent data releases have disappointed: Gross domestic product, business sentiment and a gauge of private-sector output all saw surprise drops.
Separate figures Wednesday showed exports shrank much more than analysts had expected in June, recording a 3.4% decline from May.
“The order shortage in Germany has worsened and is a major obstacle for the economy,” the ifo Institute warned. Citing its latest survey, it said that 39.4% of companies reported a lack of orders in July — up from 38.4% in April.
“The spell of weak demand has not yet been fully overcome,” the Bundesbank said in its July report, cautioning that “industrial activity is likely to improve only slowly.” The German central bank nevertheless predicted slightly firmer economic activity in the third quarter.
With manufacturers underperforming so far this year, the onus has been on services to underpin growth. A boost from industry would result in a more balanced recovery for Germany — especially with inflation proving stubborn and high wage increases fading.
--With assistance from Kristian Siedenburg, Joel Rinneby and Jana Randow.
(Updates with ifo Institute in fifth paragraph.)
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