German industry began to see green shoots of recovery in May, after coronavirus lockdowns were eased across the country.
Data from the federal statistics agency showed a 10.3% surge in industrial production alone in May, the bulk of which was down to car production ramping up again, after plants had been shuttered in April.
Total industrial output, across manufacturing, construction and energy, rose 7.8% in May from the month before, lower than the 10% increase broadly expected by economists polled by Reuters and the Wall Street Journal.
Industrial production in May was down by more than 19% from the same month last year.
“Industrial production is likely to have bottomed out, but despite the recovery in May, capacities remain underutilised,” the economics ministry said.
Germany’s economy ministry on Monday (6 July) said industrial orders rose by 10.4% in May, but warned that “the low level of orders also shows that the recovery process is far from over.”
Economy minister Peter Altmaier was optimistic however, that Europe’s largest economy will begin picking up again from October onwards. Altmaier said that while the German economy will contract by 6% in 2020, he expects growth of over 5% next year.
While Germany appears to be emerging from the coronavirus pandemic with confidence, fears remain over a potential second wave of the virus, and several smaller lockdowns were implemented in recent weeks to contain local outbreaks.
Germany’s export economy is heavily reliant on a rebound in global demand, which may hamper its recovery this year.
The German government unveiled a €130bn (£117bn, $146bn ) financial stimulus package in June that earmarks €25bn in loans and grants for small and medium-sized businesses, price incentives for electric and hybrid cars, and lowering VAT through September.
The IFO Institute for Economic Research said today that the mood amongst Germany’s factory bosses improved again in June, as they indicated they expect production to increase in the coming three months. The IFO’s production index rose to plus 4.3 points in June, from minus 19.5 in May.
The IFO also found a growing optimism looking ahead in the automotive industry, as well as among beverage manufacturers, the food industry, pharmaceutical companies, and chemical companies.