Germany's manufacturing industry remains under pressure, according to the industry organization BDI – the Union of German Industry – which reported a marked 2.5% drop in industrial production in the second quarter.
The economic recovery "is not gaining momentum," writes BDI, contrary to some signs of hope noted earlier. In the fourth quarter of 2024, German GDP grew by about 0.2% year-on-year and by another 0.3% in the first quarter of this year, but then there was a 0.3% year-on-year decline in the second quarter.
The main reason is the ongoing internal growth. Callanish understands weak demand and reduced investment, while capacity utilization remains low. More recently, the WV Stahl Steel Federation reported that capacity utilization at German steel mills was 67%.
Nevertheless, in the second quarter, the volume of orders in the manufacturing industry increased by 4.1% compared to the same period last year, driven by orders from abroad. Orders from German buyers remained weak, down 1.5% year-on-year, but were offset by orders from other countries, which rose 8%.
However, the drop in manufacturing output is a regression after the 1.3% increase seen in the first quarter. Revenue has continued to fall for two years now, and in the second quarter alone it decreased by 2.1%. BDI notes.
A slight improvement was seen in car manufacturing giant Volkswagen, where passenger car sales increased by 1% over the year, mainly due to good sales of electric vehicles.
Christian Kel Germany
Kallanish.com
