German output falls sharply

Siemens has cut jobs as global demand slows

Industrial output in Germany fell 1.5% month-on-month in July because an unusually high number of public holidays affected production, the Finance Ministry said on Friday.

Although the data was seasonally adjusted, it probably could not make up for the all the holidays falling in July this year, the Finance Ministry said.

Analysts do not think too much should be read into the fall even though recent German employment and growth figures have been poor.

"We have expected some holiday effect in July, therefore we don't see the numbers as so dramatic, because the higher number of holidays led to interruptions in production," said Rainer Guntermann, economist at Dresdner Kleinwort Wasserstein.

But falling global demand and stalled domestic growth have depressed German industrial production.

Manufacturing orders in July fell for the sixth time this year, lead by the overseas downturn.

Euro reaction

The euro dipped to $0.8935 from $0.8950 after the data showed a larger than expected fall.

Output in the energy and construction sectors rose in July but manufacturing output was down by 2.1%.

"We are going through a trough that might last longer than we thought a few months ago. The ride through the bottom of the trough will be bumpy, with no clear trend over the coming months," said Mr Guntermann.

July was also the first time the data was presented in using a new European Union harmonised method that rejigged how it was calculated.