German industrial production disappoints in May

Industrial production in Germany contracted by 1.3 percent in May, government figures showed on Thursday, falling well short of expectations.

Analysts surveyed by Factset had been pencilling in a much shallower decline of 0.1 percent in the closely-watched indicator in May after output rose by 0.5 percent in April.

Monthly data compiled by the economy ministry showed that output in the manufacturing sector declined by 1.8 and construction output shrank by 0.9 percent, while energy output increased by 3.9 percent. 

"Industrial production was weak in the middle of the second quarter," the ministry said in a statement, while noting that several long weekends and severe bad weather would had weighed on the May figures.

The day before, economy ministry data showed that factory orders stagnated in May. 

But the economy ministry suggested that "after weaker progress in the second quarter, industrial production should resume its moderate upwards trend", pointing to improving mood among business leaders.

Europe's biggest economy started strongly this year, but observers are concerned that fallout from Britain's decision to quit the EU and weakness in emerging economies that import large quantities of German goods could pose a risk to the outlook.