BERLIN (AP) — German industrial production declined for a second consecutive month in July in the latest sign that Europe's biggest economy is headed for a recession in the current quarter.

The Economy Ministry said Friday production was 0.6% lower than the previous month, following a 1.1% drop in June. That followed separate data showing factory orders fell 2.7% in July.

Germany's economy contracted 0.1% in the April-June period. It is considered likely to shrink again in the third quarter, placing it in a technical recession, and business confidence recently hit a nearly seven-year low.

UniCredit bank economist Andreas Rees argues the extent of pessimism is "an exaggeration" and said "the story is not one of outright collapse in the German industrial sector but of negative spillover effects from manufacturing to internal demand."