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By Bloomberg

German industrial production unexpectedly decreased in June, highlighting the risks for Europe’s largest economy from weaker growth in emerging-market countries such as China.

Output, adjusted for seasonal swings and inflation, fell 1.4 percent after rising a revised 0.2 percent in May, data from the Economy Ministry in Berlin showed on Friday. The typically volatile number compares with a median estimate of a 0.3 percent gain in a Bloomberg survey. Exports fell 1 percent while imports dropped 0.5 percent.

Some manufacturers, although benefiting from cheap oil, low interest rates and a recovering euro area, have faced a drag in recent months as a result of Greece’s crisis and a slowdown in China. Even so, the Bundesbank predicts “quite robust” economic growth for this year as record employment fuels consumption.

“It remains to be seen whether the economic weak phase in China will damp German factory orders in the coming months,” said Stefan Kipar, an economist at BayernLB in Munich. For the moment, “the outlook for the German economy continues to be positive.”

The euro was little changed after the report and traded at 1.0923 dollar at 9:16 a.m. Frankfurt time.

Economic Growth

Business confidence increased in July after Greece struck a deal with its creditors, and economists predict German growth accelerated to 0.5 percent in the second quarter from 0.3 percent in the previous three months.

Posing a potential risk to Germany’s export-driven economy, China is growing at its slowest pace since 1990. Officials are paving the way for new spending after four interest-rate cuts and other measures to boost lending have failed to gain much traction.

French industrial production fell 0.1 percent in June and manufacturing output dropped 0.7 percent, national statistics office Insee said on Friday.

German manufacturing output fell 1.3 percent in June, driven by a 2.6 percent slump in the production of investment goods, the ministry said. Construction plunged 4.5 percent, while energy output rose 2.3 percent. Total industrial production stagnated in the second quarter.

While output was “little dynamic” in the three months through June, “the conditions in the sector continue to be good,” the ministry said. “In light of the latest positive order intake and the continued good sentiment among companies, a continuation of the moderate upward trend in manufacturing is to be expected.”

Data on Thursday showed factory orders rose 2 percent in June, driven by an 8.8 percent increase in investment-goods demand from outside the euro area. Airbus SAS, one of the world’s largest commercial aircraft manufacturers that assembles most of its single-aisle planes in Hamburg, received 135 aircraft orders, up from the 18 placed the previous month.