Industrial output bounces back in May

Latest reading: Industrial output rebounded 1.2% in month-on-month terms in May from April's 1.6% contraction, overshooting market expectations. The notable turnaround largely reflected rebounds in manufacturing and energy production, plus an improvement in mining and quarrying output. In contrast, the construction sector output swung into contraction. On an annual basis, industrial output rose 1.0% in May, rebounding from April’s 2.1% fall and marking the best result since March 2023. Accordingly, the trend improved significantly, with the annual average variation of industrial production coming in at minus 2.8%, up from April's minus 3.5%.

Panelist insight: Commenting on the outlook, ING’s Carsten Brzeski stated: “German industry and the entire economy are still in the midst of two very different developments. For the nearer term, downside risks have clearly increased on the back of ongoing trade tensions, but also the stronger euro (which effectively acts as an additional tariff), as well as the dry and hot summer weather, which has brought water levels in Germany’s rivers to almost unprecedentedly low levels for this time of year. Still, the fact that the German government is implementing its fiscal plans without setbacks is keeping hopes high for more investment and stronger growth in 2026 and beyond.”

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