German industrial production rose more than expected in May, supported mainly by a strong rebound in car manufacturing.
German Industrial Output Beats Forecasts
According to the federal statistics office, industrial output increased by 0.9% month on month in May.
That result was stronger than expected. Analysts surveyed by Reuters had forecast a smaller 0.2% increase.
Automotive Production Drives the Rebound
The automotive sector was the main driver of the positive data.
Production in Germany’s car industry rose by 3.6% compared with the previous month.
This helped lift the overall industrial production figure and offered a more encouraging signal for Europe’s largest economy.
German Economy Shows Signs of Resilience
Ralph Solveen, senior economist at Commerzbank, said the latest figures provide hope that the German economy avoided a contraction in the second quarter.
This comes despite higher energy prices linked to the Iran war and increased economic uncertainty.
Industrial production also looked slightly stronger on a broader basis. In the less volatile three-month comparison, output from March to May was 0.1% higher than in the previous three-month period.
April Data Revised Lower
The statistics office also revised April’s industrial production figure.
After the revision, output rose by 0.2% month on month in April. The original estimate had shown a stronger 0.4% increase.
Analysts Remain Cautious
Despite the strong May figure, some economists warned that the rebound may not last.
Andrew Kenningham, chief Europe economist at Capital Economics, said the rise in automotive production is unlikely to be sustained because the sector still faces major challenges.
Industrial Orders Add to Optimism
The latest production data followed another positive signal from German industry.
German industrial orders rose by 1.9% in May, according to data released on Monday. Orders also increased strongly even when large-scale items such as aircraft, ships, trains and military vehicles were excluded.
Outlook for German Growth Improves
Carsten Brzeski, global head of macro at ING, said German industrial production is proving resilient despite the war in the Middle East and soaring energy prices.
He noted that output increased during the first two months of the second quarter, rather than falling.
Brzeski added that stronger industrial data, the government’s new reform package and ongoing fiscal stimulus for infrastructure and defense have made the outlook for German growth more optimistic.
“All in all, developments of the last weeks have provided tentative signs of optimism – for a change,” he said.
