German industrial output down in May

German industrial output fell one percent in May from activity a month earlier, largely due to a drop in the construction sector, initial data from the economy ministry showed on Monday. The figures, which came on the same day as a fall in exports for May, heightened concern that the recovery in Europe's biggest economy from the eurozone crisis remains fragile. The seasonally- and calendar-adjusted decline in industrial production was worse than a 0.50 percent fall predicted by a Dow Jones Newswires poll. It came after a revised rise of 2 percent in April. "Following the at times substantial gains of recent months, industrial production slowed slightly in May," said the ministry in a statement, adding that output remained on an "upward trend". Pointing to good business confidence indicators, the ministry predicted that "the recovery in the manufacturing sector should continue in a somewhat subdued manner". The construction sector, which was impacted by a harsh and long winter, had recovered strongly in April as builders sought to make up for lost time but was down again in May, falling 2.6 percent. Germany narrowly scraped past recession in the first quarter when it booked 0.1 percent economic growth, after the economy had contracted by 0.7 percent in the final quarter of last year. Christian Schulz, senior economist with Berenberg, said "to some extent the May data reflects normalisation after the volatility in April and March, which had been caused by the impact of the unusually long winter on construction and energy output and the rebound thereafter". He added that "Germany's manufacturing sector is not doing too badly" and that things should improve as key export markets recover, adding that "the eurozone is showing signs of stabilisation and the US is going strong". "Second-quarter GDP growth should make up for most of the disappointment in Q1 and give way to trend growth rates for Germany for the rest of the year," Schulz wrote in a note.