German industrial production unexpectedly declines in July, raising concerns over a potential recession

German industrial production dropped by 2.4% in July, following an upwardly revised 1.7% increase in June, far exceeding the expected 0.4% decline and tempering hopes for economic recovery.

The data, released on Friday, dampened optimism for a quicker rebound and heightened fears of a deeper downturn that could push the Eurozone’s largest economy into a recession in the third quarter of 2024.

July’s decline was primarily driven by a sharp 8.1% drop in automobile production, following a 7.9% fall in the previous month. Other industrial sectors also reported weaker performance, contributing to the growing pessimism.

The figures show that July’s sharp fall more than erased June’s gains, despite the upward revision of June’s numbers.

Economists remain concerned about Germany’s industrial sector, which shows no signs of recovery and raises fears of contraction. Expectations are that the economy will stagnate for the remainder of the year, with ongoing recessionary trends in manufacturing, imports, and exports.