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German industrial output rebounds in sign of post-lockdown recovery

People wearing face masks walks in Frankfurt am Main, western Germany, as the European Central Bank headquarter can be seen in the background.

YANN SCHREIBER

Germany’s industrial production rebounded in May, rising by 7.8% on the month after falling by a revised 17.5% in April, the Statistics Office said on Tuesday, in the latest sign that Europe’s largest economy is recovering after lockdown.

The bounce-back, more modest than the 10% rise economists had been forecasting, was led by a 27.6% surge in production of capital goods. Growth was more modest in other areas and factories churned out fewer intermediate goods.

A host of indicators in past days have shown clear signs that the exporting powerhouse has put the worst of the impact of the coronavirus lockdown behind it: orders for industrial goods rose 10.4% in May, rebounding from their biggest
drop since records began in 1991 the previous month.

Despite the recovery, production is still well below the levels recorded before the onset of the coronavirus crisis. May output was down 19% in calendar-and season-adjusted terms on February, the month before lockdown measures were
imposed.

Nonetheless, firms in the sector are optimistic. A survey by the Ifo institute showed that they expect their production to increase in the coming three months. 

Germany has withstood the crisis better than most of its neighbours, suffering relatively fewer deaths from the virus. Its economy has also weathered the pandemic better, partly because it let factories and construction sites remain open.

The government is helping the economy weather the crisis with massive rescue and stimulus packages, including rolling out short-time work, a form of state aid designed to encourage companies to keep employees on the payroll during a
downturn.

Still, the government expects the economy to shrink by 6.3% this year, its worst recession since World War Two.

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