Production in the manufacturing sector rose by 0.9 percent in May compared to April, following a 0.2 percent increase in the previous month. This raises hopes that the German economy did not shrink in the second quarter despite the drastic rise in energy prices. Key drivers were automotive production, up 3.6 percent, and construction, up 0.9 percent.
“Well-filled order books and recently lower oil prices promise further tailwinds for industrial activity,” commented Marc Schattenberg of Deutsche Bank Research. Industrial production in the narrower sense increased by 0.8 percent but remains one percent below the previous year’s level. Construction posted a year-on-year increase of 3.5 percent, while energy generation was two percent above the prior year.
The Federal Ministry of Economics struck a cautious note: a broad recovery in industrial activity is not yet in sight. Production has recently gained some traction but remains characterized by sectoral differences and strong fluctuations. Although shipping traffic through the Strait of Hormuz has resumed, uncertainty regarding a normalization of trade activities remains high.
On Tuesday, new data on incoming orders had already shown that the manufacturing sector has weathered the Iran war better than initially feared. Incoming orders rose by 1.9 percent in May compared to the previous month, driven by large-scale orders. Even excluding these, the increase was one percent. Foreign demand grew by 2.2 percent, stronger than domestic demand at 1.3 percent.
Source: www.faz.net
