German industrial output plunged unexpectedly in May, posting its steepest monthly drop since August 2014. As Sonia Legg reports, the data suggests Europe's largest economy lost steam in the second quarter after its surprisingly strong start to the year.
It had been steaming ahead but Germany's industrial output has just hit the brakes. Data for May shows a drop of 1.3 percent - the steepest monthly drop since August 2014. And it came just a day after flat May industrial orders The Economy Ministry blamed too many public holidays and the emerging market slowdown. Either way some now see growth more than halving in the second quarter to 0.3 percent. (SOUNDBITE) (English) PANMURE GORDON, MARKET COMMENTATOR, DAVID BUIK, SAYING: "First and foremost, Germany doesn't have Russia as its pal any more. Secondly, the level of business that China was doing four years ago - Germany was the top exporter to China - has dropped." The surveys were conducted before the Brexit vote. And the shock from that is expected to hurt Germany too. Industry body DIHK expects a 1 percent drop in exports to the UK this year - down from a previous 5 percent rise, with a 5 percent fall in 2017. And that's not all - in its poll of 5,600 firms one in four were planning to cut jobs in their British units. (SOUNDBITE) (English) PANMURE GORDON, MARKET COMMENTATOR, DAVID BUIK, SAYING: "The business done within the European Union, the manufacturing output has dropped fairly significantly and trade has dropped fairly significantly on a global basis so Germany is just reflecting what is going on around the world." As for the UK itself - industrial output expanded at 1.9 percent during the three months to May - the fastest pace in six years. Few will be cheering though after the collapse of sterling following the Brexit vote. The low pound also means, on Reuters calculations, that France has overtaken the UK as the world's fifth largest economy.