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.
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.