German industrial production sees surprise drop in May

Steel plant Manufacturing weighed down industrial production

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German industrial production saw its biggest drop in two years in May, weighed down by sharp falls in the construction and manufacturing sectors.

Industrial production fell 1.8% in May from April, according to the country's statistics agency Destatis.

The fall was a surprise, with the majority of economists expecting industrial output to be unchanged.

Destatis also cut April's industrial production figure slightly to -0.3%.

Germany's statistics agency blamed the timing of May bank holidays and weakness in the construction sector for the fall, but said "geopolitical factors" may also have had an effect.

German think tank Ifo said it thought both the Ukraine crisis and the impact on oil prices by the insurgency in Iraq were factors concerning German businesses.

Dekabank economist Andreas Scheuerle said May's fall was a "massive disappointment".

"Even if some of this is down to missing days at work... and might be recovered later, there was simply not the momentum in the second quarter," he added.

In the first quarter, Germany's economy grew by 0.8% but it is expected to see a slowdown in the second quarter.

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