German exports fell by more than expected in June and industrial output also declined, ending an otherwise strong second quarter on a weak note in a setback for the recovery in Europe’s largest economy.

Seasonally-adjusted exports fell by 1 per cent on the month, while imports dropped by 0.5 per cent. The net balance widened the trade surplus to a record €24.0 billion, data from the Federal Statistics Office showed on Friday.

Economists polled by Reuters had been expecting exports to fall by 0.5 per cent and imports to increase by 0.5 per cent on the month.

Industrial output meanwhile dropped by 1.4 per cent in June, falling short of economists’ mid-range forecast in a Reuters poll for a rise of 0.3 per cent.

The Economy Ministry said the soft performance by the industry in the spring was mainly due to weakness in construction, which saw a dip after a strong first quarter.

“The conditions for the sector remain good,” the ministry said in a statement.

Figures released on Thursday showed German industrial orders recorded their biggest gain in the April-June period since early 2011, thanks mainly to strong foreign demand despite a slowdown in China and uncertainty caused by the Greek debt crisis.

In another positive sign, a survey published this week showed manufacturing activity rose slightly in July as new contracts piled in.

Some recent forward-looking data has provided grounds for optimism, with business morale improving after Greece and its creditors reached an agreement.

Some industrial companies have made upbeat announcements. Siemens, for example, has performed better than expected despite weakness in China as the recovery in Europe helped boost some sales.

But truck maker MAN cut its profit and sales expectations for this year because of a plunge in Brazilian demand. Food-processing technology maker GEA’s orders dropped by 9 per cent on an organic basis in the second quarter.

Reuters