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Last Updated: Friday, 7 October 2005, 13:40 GMT 14:40 UK
German gloom as output declines
BMW production line
German economists had expected a smaller drop in output
German industrial output fell 1.6% in August as surging oil prices brought economic gloom.

The decline was bigger than analysts had expected and follows a 1.2% increase in July.

The news comes as Germany struggles to form a stable government after last month's inconclusive general elections, which gave no party a clear mandate.

The economy and labour ministry said that despite the latest fall, the trend in production was still upward.

The output figure includes production at German factories, utilities, mines and construction sites.

The German economy is forecast to grow around 1% this year, and the weak figure for Europe's biggest economy is acting as a drag on EU growth.

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