German factory production drops unexpectedly in June

German factory production dropped unexpectedly in June but economists say there are still good signs for longer-term growth.

The Federal Statistical Office said Monday that June industrial output was down 1.1 percent over the previous month with drops in the production of capital, consumer and intermediate goods. Economists had predicted a slight rise, but only energy sector production grew.

The drop followed a 1.2 percent rise in May, and ING economist Carsten Brzeski notes that despite the disappointing June numbers, production this year has been strong overall, and says there are indications of a turnaround ahead.

He says "low inventories and stronger new orders bode well for industrial production in the coming months," adding "the German economy is still on track to post another strong quarter. "