While Germany’s Economic and Climate Action Ministry of Robert Habeck blames the “international conjuncture” for the country’s industrial collapse, economists are ringing the alarm bell over the data released for May (see July 6 briefing). “The significant drop in industrial production makes it clear once again that a rapid and significant economic recovery is nowhere in sight,” said Commerzbank chief economist Jörg Krämer. After a stagnation of economic output in the second quarter, only an anemic upward movement is to be expected. The weak production data follows disappointing order figures from the previous day. According to the figures, industrial orders fell for the fifth time in a row in May. The monthly decline amounted to 1.6%. In a year-on-year comparison, 8.6% fewer orders were received.” Economist Jens-Oliver Niklasch from Landesbank Baden-Württemberg commented: “Another piece of bad news from the industry. It seems that a turn for the better is further away than ever.”
The auto industry performed very badly with a drop of more than 5% compared to April. The bad result may also have been affected by the number of public holidays.
A sharp decline is also registered for France’s industrial production. According to data released by the national statistics institute, the decline was 2.7% over the previous month and 3.9% year-on-year. Doing worse than expected were many sectors including, as in Germany, automotive production. The French statistical institute also points out that in a context of still high electricity and gas prices, energy-intensive productions are particularly exposed to rising costs, possibly affecting production. For these sectors, production in the last three months (March to May 2024) remains significantly lower than in the second quarter of 2021 (the last quarter before the start of energy price increases). This is especially true in the steel sector (−26%). production of basic chemicals (−14.7%), and glass/glassware (−12.4%).
Italian data will be released July 10. Due to the integration of the Italian industry with the German one, a similar or worse performance is feared.