Germany appears to be weathering the Iran war, after an industrial pickup follows strong retail sales figures released last week, Capital Economics' Andrew Kenningham says in a note. Industrial production grew 0.9% on month in May, which with other data suggests the German economy may have expanded in the second quarter of the year. However, the rise in industrial output was mostly due to an increase in auto production, which is unlikely to be sustained given the challenges which this sector faces, Kenningham says. "While German manufacturing seems not to have been greatly affected by the Iran conflict, this does not change the reality that it is likely to shrink as a share of the economy over the medium term," he says. (edward.frankl@wsj.com)