German industrial production missed a predicted 0.5% rise in May, and instead slipped back by 0.3%. Government statistic base Destatis revised April’s industrial output down to 0.3% from an earlier projection of 0.1%, which was some way off the Wall Street Journal’s estimation of a 0.5% rise.
Despite the downward trend, year on year, Germany’s economic output has grown by 17.3%. Compared with February 2020, just before the coronavirus swept across the globe, production was 5% lower in seasonally and calendar-adjusted terms.
In May 2021, production in German industry, excluding energy and construction was down 0.5%. Production of consumer goods enjoyed more success, however, rising 4.1%, while production of intermediate goods was up 0.6%. Beyond industrial manufacturing, energy production fell 2.1% in May, while construction output was up 1.3%.
Andrew Kennington, chief European economist at Capital Economics identified sluggish movement in the auto sector as a key challenge facing the German economy but is positive about the future.
He said: “The small decline in German industrial production in May, which left it well below its pre-pandemic level, was due to another fall in vehicle production. This is likely to be resolved only gradually but otherwise, the German economy is recovering strongly.”
German production outlook
Commenting on the latest production figures, Pantheon Macro chief eurozone economist Claus Vistesen said: “The upward revision to the April number will help the Q2 number, but these are soft numbers all the same.”
He added: “It is now clear that supply-side constraints are biting, inserting a wedge between soaring new orders and lacklustre production. Indeed, it is now clear that German manufacturing stalled in the first half of the year.”