Germany's industrial production remained unchanged in July as the improvement in construction and manufacturing was offset by the deterioration in the energy sector.

Industrial production showed nil growth following a 1.1 percent decrease in June, data from Destatis showed Thursday. Output was forecast to grow 0.5 percent.

Excluding energy and construction, industrial production gained 0.3 percent in July.

Energy production decreased 4.7 percent in July, while construction output grew 0.5 percent.

Production of capital goods and the production of consumer goods fell 0.3 percent each. Meanwhile, the production of intermediate goods showed an increase of 1.4 percent.

Year-on-year, industrial production growth improved to 4 percent from 2.7 percent. Production was forecast to climb 4.6 percent.

The economy ministry said industrial production lost momentum in the summer after a very dynamic first half. The indicator suggests continuation of the upswing but at a slower pace, the ministry said.

Data released on Wednesday showed that factory orders logged a 0.7 percent drop in July, which was the first fall in three months.

While production should pick up again in the coming months, the rather modest order intake trend points to only a gradual upward movement, Ralph Solveen, Commerzbank analyst said.

Consequently, the surge of the overall economy from the producing sector should be lower in the third quarter than in the first half of the year, Solveen noted.

The slowdown in German industry may raise eyebrows at the European Central Bank's meeting today, and a further rise in the euro would be a threat to the growth outlook, Jennifer McKeown, an economist at Capital Economics, said.

But for now, economic prospects seem positive and the ECB is expected to gradually taper its asset purchases next year, although it is unlikely to announce its plan today, the economist added.

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