German industrial production falls for the first time in 2017 in June

German industrial output retreated in June for the first time in 2017, weighed down by falling capital goods and

Total production shrank by 1.1% month-on-month, according to the Federal Office of Statistics, almost fully reversing a 1.2% rise in the month before.

Economists had forecast a rise of 0.1% on the month and of 3.7% on the year.

Factory output was the weak link in the chain, falling by 1.4% versus May. Within that, capital goods output decreased by 1.9%, that of intermediate goods by 1.2% and that of consumer goods by 0.7%.

Construction output was also weaker, diminishing by 1.0% on the month.

Energy production on the other hand rose by 1.4%.

Following the report, Jack Allen at Capital Economics told clients he still expected industry in the euro area's largest economy to perform well in 2017, pointing to gains for industrial orders in May and June as well as the results of the latest IFO institute surveys.

In July, the current conditions and expectations subindices for manufacturing published by IFO hit multi-year highs, he said.

As well, even after a second consecutive fall in July, IHS Markit's German purchasing managers' index was consistent with an annual rate of growth in total industrial output of roughly 3%, Allen said.

On a dourer note, on the back of the latest German factory orders data release on 4 August, Barclays Research said: "Despite strong GDP growth, rising wages and a booming labour market, the German economy appears to be struggling to rebalance towards private consumption. However, factory orders indicate that the German economy remains highly vulnerable to a slowdown in global trade either through protectionism or weaker demand in Germany’s main export partners, such as China, the UK or the US."