German industrial output fell 1.8 per cent on the month in May, its biggest drop in more than two years, the Economy Ministry said, blaming mostly the way public holidays fell but also pointing to weakness in construction and geopolitical effects.

The drop was a surprise: the consensus forecast in a Reuters poll was for industrial output to be unchanged. The ministry also slightly downwardly revised April data to -0.3 per cent from a previous -0.2 per cent.

“After a strong first quarter, industry output weakened over the last months. Besides the effect of the bridge days in May and weakness in construction, which was to be expected after the mild winter, geopolitical factors may also have played a part,” the ministry said in a statement.

“The second quarter is gradually turning into a massive disappointment. So far, May has brought disappointing retail sales, falling industry orders and now a significant fall in production,” said economist Andreas Scheuerle at Dekabank.

“Even if some of this is down to missing days at work because of the bridge days, and might be recovered later, there was simply not the momentum in the second quarter. That said, the general state of the German economy is not in question. The third quarter should be strong again,” he said.

The Economy Ministry did not specify which geopolitical areas were of concern but economists, such as the influential Munich-based Ifo think tank, say business is worried about the Ukraine crisis and the impact on oil prices of the insurgency in Iraq.

Following 0.8 per cent growth in the first three months of the year, the German economy is widely expected to slow in the second quarter. However, the government forecasts growth of 1.8 per cent for the year as a whole on the back of strong domestic demand and a healthy jobs market.