Source: Sharecast
Production declined by 2.4% on the month, having risen 1.7% in June, and versus expectations for a 0.3% decline.
On the year, industrial production fell 5.3% in July following a 3.7% decline the month before.
Destatis said production declined in most sectors of manufacturing, although the drop in the automotive industry had a particularly negative impact on overall performance, down 8.1% month-on-month following growth of 7.9% in June.
Franziska Palmas, senior Europe economist at Capital Economics, said: "The big drop in German industrial production in July adds to the sense that the sector is facing a deep crisis and that, having contracted in Q2, the German economy may fall back into a technical recession in Q3."
Carsten Brzeski, global head of macro at ING, said: "Today’s data is a cold shower for everyone hoping for a speedy recovery. In fact, it suggests that the bottoming out of industry still has a long way to go. We've already got weak sentiment indicators, and the risk of yet another quarter of stagnation or even contraction has clearly increased."