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German companies are battling with unprecedented supply-chain problems as a result of a sudden surge in global activity following the end of coronavirus lockdowns. (Photo: Bloomberg)

German factory orders unexpectedly drop as car sales slump

German companies are battling with unprecedented supply-chain problems as a result of a sudden surge in global activity following the end of coronavirus lockdowns. (Photo: Bloomberg)

German manufacturers unexpectedly saw demand decline in May, suggesting an uneven start to the country’s economic recovery.

Orders fell 3.7 per cent, worse than all estimates in a Bloomberg survey. The Economy Ministry said the slump was driven by weak export demand for cars following a steep rise the previous month. Domestic orders rose 0.9 per cent.

German companies are battling with unprecedented supply-chain problems as a result of a sudden surge in global activity following the end of coronavirus lockdowns, a trend that is also driving up prices amid competition for inputs and raw materials. While some of those bottlenecks may have started to ease, it’s likely to take time for disruptions to pass.

In this Wednesday, March 21, 2018 file photo, the logo of German car manufacturer BMW is pictured at the headquarters in Munich, Germany. German automaker BMW AG lost 212 million euros (US$250 million) in the second quarter 2020 as the coronavirus pandemic shutdowns cut vehicle sales by a quarter in the April-June period. (Photo: AP/Matthias Schrader)

Meanwhile, the country’s service sector is bolstering momentum after widespread reopenings of restaurants, shops, and cultural venues. Business confidence climbed to the strongest in more than two years and the number of workers on state wage support fell to 1.5 million from 2.3 million — the lowest since February last year.

Industrial production probably increased 0.5 per cent in May, according to a survey before data on Wednesday. The German economy, Europe’s largest, is set to grow 3.7 per cent in 2021, the Bundesbank said in its latest projections, reaching pre-pandemic levels as soon as this summer.