German industrial production rises less than expected in May

German industrial production rebounded in May, albeit less than expected, according to figures released by Destatis on Tuesday.

Industrial production increased by 7.8% following a revised 17.5% slide in April, missing expectations for a 10% jump.

On the year, production slumped 19.3%, which was an improvement on the revised 25% drop seen in April but worse than the 11.3% decline expected.

Production in industry excluding energy and construction was up 10.3%. Within industry, the production of intermediate goods showed dipped 0.1%. The production of consumer goods rose 1.4% and the production of capital goods was 27.6% higher.

Outside industry, energy production rose 1.7% in May and the production in construction increased 0.5%.

Destatis said production in the automotive industry increased "markedly" in May after a very low level in April 2020. However, it was still by just under 50% lower than in February 2020.

Jack Allen-Reynolds, senior Europe economist at Capital Economics, said May’s increase in German industrial production left it still "well below pre-crisis levels".

"But with retail sales rising more rapidly, overall economic activity is picking up a little more quickly than we assumed," he said.

"There is sure to have been another increase in overall industrial production in June as demand recovers and manufacturers adjust to physical distancing rules. That said, we suspect that output will have remained well below normal levels. New car registrations in June were still down by a third compared to the same month last year, and the business surveys are consistent with year-on-year industrial output growth remaining in negative territory."