After lockdown restrictions were eased, Germany’s industrial production grew for the first time in three months in May, suggesting that the economy started to recover from the unprecedented downturn caused by the coronavirus pandemic.
Industrial output grew 7.8 percent on a monthly basis in May, in contrast to a revised 17.5 percent fall in April, data released by Destatis revealed Tuesday. Production was forecast to grow 10 percent in May.
On a yearly basis, industrial production declined 19.3 percent versus a revised 25 percent decrease in April.
The economy ministry said industrial production is likely to have bottomed out, but despite the recovery in May, capacities remain underutilized.
The increase in incoming orders indicates a further increase in production in the coming months. However, the development of foreign demand remains a risk for the further recovery, the ministry observed.
Carsten Brzeski, an ING economist said data suggests that the return to normality will not be easy. Monthly economic data will surge but it will need more than one or two surges to bring economies back to their pre-crisis levels, he added.
Excluding energy and construction, industrial production was up 10.3 percent in May.
Energy production gained 1.7 percent in May and construction output grew 0.5 percent.
Within industry, intermediate goods output dropped 0.1 percent, while consumer goods and capital goods production advanced 1.4 percent and 27.6 percent, respectively.
Destatis said the production in the automotive industry increased markedly in May, after a very low level in April 2020. However, it was still by just under 50 percent lower than in February 2020.
Data released on Monday showed that factory orders advanced 10.4 percent month-on-month in May, which was the first increase in four months.
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