FRANKFURT, Sept 5: The German ministry of the economy said on Friday that industrial production fell 1.8pc in July from June, with the three main categories of output showing declines.

The ministry said capital goods demand declined 3.7 per cent in July versus June, while consumer goods production fell nearly 2 per cent. Intermediate manufactured goods produced declined by nearly 1 per cent for the month.

The ministry said June and July production fell 1.7 per cent compared with April and May.

“The situation in the industrial sector will not improve any time soon,” Alexander Koch, an economist at UniCredit, said, predicting the economy could well slide into a technical recession_two consecutive quarters of shrinking growth.

“In combination with the continuing strong fall in the assessment of backlog orders, the lack of fresh supply of orders argues for weakening industrial performance for the remainder of this year,” he said.

Koch said weakening industrial performance is underpinned by weak business sentiment expectations — the University of Munich’s Ifo Indexes — which he said “have been a relatively good leading indicator for the production dynamic in the past.”

The Ifo has reached record lows in past months.

Inflation also could continue to plague industry in the euro zone, limiting demand and expansion, the European Central Bank said Thursday—AP