Germany's industrial production hits worst level since 2020
- German industrial production falls 1,9% in June
- Industrial orders fall for the second month in a row
- Exports grow driven by demand from the European Union
Germany's industrial production in June reached its lowest level since May 2020, a period marked by economic shutdowns due to the Covid-19 pandemic. According to the Federal Statistical Office (Destatis), it fell 1,9% compared to May, exceeding analysts' forecast of a 0,5% decline.
The decline occurred amid weak global demand and an economic slowdown in key trading partners. The country, whose economy relies heavily on exports, is also facing the impact of tariffs imposed by the United States and pressure from competition from Chinese industry.
Revised data from Destatis showed that, contrary to the 1,2% increase initially reported for May, there was a 0,1% contraction compared to April. In the second quarter, industrial production fell 1%, returning to levels seen at the beginning of 2020.
Carsten Brzeski, global head of macroeconomics at ING Research, warned that the figures could lead to a revision of the estimate of a 0,1% contraction in German GDP in the second quarter of 2025. According to him, "industry remains stuck in a long recovery period."
In addition to the drop in production, industrial orders decreased 1% in June, marking the second consecutive month of decline, driven mainly by lower external demand.
Despite the unfavorable scenario, German exports rose 0,8% in June compared to May, exceeding expectations of 0,5%. Sales to European Union countries grew 2,4%, while shipments to nations outside the bloc fell 1,2%.
Exports to the United States performed poorly, falling 2,1% in the month, the third consecutive decline, reaching the lowest level since early 2022. Analysts point out that the movement reflects the anticipation of purchases in the previous period, due to the tariffs implemented by current US President Donald Trump.
In the same month, imports increased 4,2% to €115,6 billion, reducing the trade surplus to less than €15 billion, compared to €18,5 billion in May. For Franziska Palmas, senior economist at Capital Economics, weak growth in Europe and China, coupled with intensified Chinese competition, is likely to maintain pressure on German industry in the coming months.
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