German industrial output slumps again in July, heightening recession fears

German industrial output fell again in July, slumping 0.6% month on month, according to data agency Destatis, leaving the odds of the country falling into recession “all but confirmed”, according to an analyst.

The July fall was largely driven by a 1.3% month on month drop in energy production, as well as contractions in intermediate and capital goods output, offsetting increases in consumer goods and construction.

Output also fell 1.1% in June, fuelling concern that one of the key engines of the eurozone will be shown to have fallen into recession during the quarter.

“A much worse headline for industrial output than we had expected,” said Pantheon Macroeconomics chief eurozone economist Claus Vistesen.

“The July industrial production headline combined with the dreadful retail sales number now send a convincing signal that the German economy is in recession. The August and September numbers could still spring upside surprises, but we don’t have high hopes,” he added.

Overall eurozone private sector output expanded in July and August, but the modest rebound has been marked by a divergence between the service sector, which has proven more robust, and the manufacturing sector, a the key end market for the chemicals industry.

The UK may also be on the verge of slipping into recession as economic uncertainty and political paralysis around the country’s 2016 vote to quit the union continues.