Industrial production in Germany continued to recover in May despite supply difficulties and higher energy prices caused by the Ukraine war, official data showed on Thursday.
The manufacturing sector, a pillar of Europe’s largest economy, rose 0.2% in the month after expanding 1.3% in April, according to figures reviewed by the Destatis statistics institute. It continues to recover after a significant drop of 3.7% in March, which was caused by the Russian military’s invasion of Ukraine in February. The indicator is slightly worse than expected by financial analysts on the Factset platform, which expected a 0.3% increase. Production fell 1.5% in May over the year, Destatis said.
In detail, industrial production was driven by capital goods, which increased by 2.2%, while intermediate goods decreased by 0.4%. The production of consumer goods lost 0.9% amid high inflation, which undermined the purchasing power of households. “All the same, a bit more and a correct figure given the circumstancescommented LBBW bank economist Jens Oliver Niklash. The war in Ukraine had a direct impact on German industrial activity, which was heavily dependent on international trade for both supplies and outputs. Restrictions in China related to Beijing’s zero-Covid strategy are also hampering the industry, which is massively supplied in the country. The automotive sector, the Queen’s branch, was particularly affected.
Several manufacturers have been particularly affected by the lack of key components produced in Ukraine, where factories have been idled. Result: Car registrations in Germany fell, falling 11.0% in May, after 10.2% in May and 21.5% in April. This industrial slowdown puts a brake on the economic recovery that started in Germany at the beginning of the year. In the first quarter, GDP thus grew by just 0.2%, after contracting by 0.3% in the fourth quarter of 2021, which was aggravated by the coronavirus pandemic. And the Bundesbank, Germany’s central bank, sharply cut its 2022 growth forecast in early June, now expecting growth of 1.9%, down from its December forecast of 4.2%. The government predicts 2.2 percent growth, compared to 3.6 percent in January.
Source: Le Figaro
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