Berlin (Reuters) – Unexpected damper for the German economy: The companies increased their production in July after the corona-related slump for the third month in a row, but far less than expected.
Industry, construction and energy suppliers together produced 1.2 percent more than in the previous month, as the Federal Statistical Office announced on Monday. Economists polled by Reuters had, however, expected a stronger plus of 4.7 percent. In June there was an increase of 9.3 percent, in May of 7.4 percent.
“Not even 60 percent of the Corona slump has been made up,” said DekaBank economist Andreas Scheuerle. “It now turns out that recovery is hard work.” The German Chamber of Commerce and Industry (DIHK) complained that the recovery was “only progressing slowly”. “The lack of domestic and international demand prevents production from normalizing again this year,” said DIHK expert Kevin Heidenreich. The Federal Ministry of Economics, on the other hand, expects a sustained upward trend. “The improved mood in the company and the reduced short-time work suggest that the catching-up process will continue in the coming months, although it will likely take some time,” said his optimism.
Despite the unexpectedly weak start to the summer quarter, economists anticipate strong economic growth. Commerzbank, for example, believes that GDP growth of nine percent is possible after a record slump of 9.7 percent in the spring. However, there are still major risks for the European export champions Germany. “With the increase in the number of infections, the global uncertainty due to the US-Chinese disputes in the technology sector, the upcoming elections in the US and other geopolitical risks, it shouldn’t come as a surprise if the global investment mood clouded over,” warned him Chief economist at fund provider DWS, Martin Moryson.
Industry alone increased its production by 2.8 percent at the beginning of the second half of the year, while construction and utilities each reported a decline. She had recently landed more orders for three months in a row after suffering severe slumps at home and abroad due to the Corona recession. In the coming months the industry expects a slight increase in its production. The corresponding Ifo indicator rose by 1.1 to 15.4 points in August. “The engine of the German economy, industry, is gradually getting back on its feet,” said the head of the Ifo surveys, Klaus Wohlrabe. For the first time in a year or so, the machine-builders are expecting their production to expand again. The auto industry continues to expect a plus, but is no longer as optimistic as it was in the previous month.