German industrial output posted its biggest monthly increase since March 2012 in July, rising far more than forecast and marking a strong start to the third quarter for a key sector of Europe’s powerhouse economy.

Industrial production increased by 1.9 per cent in July after a shaky second quarter in which it fell in two out of three months, data from the Economy Ministry showed yesterday.

“German industrial production rebounded in July, providing further evidence that the eurozone’s largest economy should return to growth in the third quarter,” said Carsten Brzeski, senior economist at ING.

The German economy shrank by 0.2 per cent in the second quarter due to weak investment and slow trade, leading some economists to warn that there is a risk that Germany will fall into recession in the July to September period.

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