German exporters have long been flying the flag for the economy

Production dipped by 0.4% from May, according to Economy Ministry figures.

Germany's economy is the largest in Europe and it has relied heavily on export sales to drive growth as consumers spending has been subdued.

However, over recent months inflation fears have increased prompting a rise in global interest rates that many analysts are worried may hamper growth.

Foreign impulses

Last week the European Central Bank and the Bank of England both increased their benchmark interest rates. The US Federal Reserve, which has been steadily hiking borrowing costs, is due to meet on Tuesday and Wednesday.

The latest output data show the growth trend in industrial production remains in place Economy Ministry

Economists are predicting that the most recent period of low-interest rates and cheap money has drawn to a close.

"The trend in manufacturing orders is pointing down which is in no small part down to global economic developments," said Andreas Scheuerle at DekaBank.

"Impulses from abroad will wane."

The Economy Ministry was less pessimistic, however, and pointed to figures it released earlier showing that Germany's trade surplus had narrowed by more than the market had expected in June.

Exports rose by 1.5% in June to 72.2bn euros (�49bn), while imports added 3.5% to 60.3bn euros, the ministry said.

The football World Cup helped to boost Germany's domestic demand

As a result, it remained optimistic about the prospects for the national economy and said that industrial production should pick up and growth should return to previous "dynamic" levels.

"The latest output data show the growth trend in industrial production remains in place," the ministry said.

Also the Tuesday, the ministry revised its May industrial production data to show that output had risen by 1.5% during the month.