Economic situation - German industrial production falls surprisingly
The production of the German industry is declining significantly. The Federal Statistical Office in Wiesbaden reported that total production decreased by 2.5 percent in May compared to the previous month. This is the most noticeable setback since the end of 2022. Analysts had on average predicted a slight increase of 0.1 percent. Compared to the previous year, production fell by 6.7 percent.
"The significant decline in industrial production once again makes it clear that a rapid and significant economic recovery is not in sight everywhere," said Commerzbank Chief Economist Jörg Kraemer. After a stagnation of economic output in the second quarter, only a bloodless upward trend can be expected.
The weak production data follow disappointing order numbers from the previous day. Industrial orders in May fell for the fifth month in a row. The decline on a monthly basis was 1.6 percent, and in annual terms, 8.6 percent fewer orders were received.
Economists alarmed by decline
"Another bad news from industry," commented Economist Jens-Oliver Niklasch of Landesbank Baden-Württemberg on the new data. "It seems that a turnaround for the better is even further away than ever." The German economy is experiencing its second year of stagnation in a row.
Recently, there had been signs of improvement: The business climate had brightened somewhat, several economic institutes had raised their growth forecasts - albeit from a low level. But all of this could still be at risk: "The German economy is losing steam again," explained Chief Economist Carsten Brzeski of Bank ING.
The Federal Ministry of Economics commented cautiously on the initially subdued industrial conjuncture in a statement. "Only in the course of the further recovery of global trade and the gradual revival of demand for industrial goods can production stabilize."
In detail, only the energy sector could impress in May. Its output increased by 2.6 percent compared to the previous month. However, industrial production of goods decreased by 2.9 percent. Activity in construction was also significantly weaker, with a decline of 3.3 percent.
- Jörg Krämer, the Chief Economist at Commerzbank, stated that the significant decline in industrial production indicates a rapid and significant economic recovery is unlikely to occur everywhere in Germany.
- The Federal Statistical Office in Wiesbaden, also known as Destatis, reported that Germany's industry experienced a 2.5% decrease in production in May compared to the previous month, which led to economists expressing concern about a potential turnaround.
- According to Economist Jens-Oliver Niklasch of Landesbank Baden-Württemberg, the new production data adds to the disappointment in the industry, further postponing the expectation of a better turnaround for the German economy.
- Despite some signs of improvement in the business climate and revised growth forecasts, Chief Economist Carsten Brzeski of Bank ING stated that the German economy is losing steam again, potentially impacting the initial subdued industrial conjuncture and global trade recovery.
