German economy still struggling despite surge in manufacturing orders, experts say

Frankfurt [Germany], July 8: As German manufacturing orders have increased at their highest rate since June 2020, a moderate recovery in industrial activity is expected in the coming months. However, experts warn that weak production threatens to prolong the recession in Germany.
New orders in Germany's manufacturing sector in May rose by 6.4 percent in real terms compared with the previous month, marking the highest growth rate since June 2020, the Federal Statistical Office (Destatis) said on Thursday.
Despite the pessimistic outlook among businesses, "the recent stabilization of demand points to a recovery, albeit initially moderate, in industrial activity in the coming months," the German Ministry for Economic Affairs and Climate Action (BMWK) said in a news release on Friday.
Industrial orders in Germany surpassed economists' expectations with a notable increase, but the industrial production data released on Friday did not sustain the positive momentum.
German industry produced 0.2 percent less in May than in the previous month, Destatis said on Friday. Economists had predicted a stagnation in production.
The 13.1 percent slump in the output of pharmaceutical products and the 7 percent drop in energy production have had a significant negative effect on overall performance, while manufacturers of motor vehicles, trailers and semi-trailers reported a 4.9 percent production increase, Destatis noted.
Experts said that the German economy is rather unpredictable as it continues to run at a slow pace and remains under pressure.
Alexander Krueger, chief economist with the German private bank Hauck Aufhauser Lampe Privatbank, described the production outlook for the second half of the year as severely clouded. Aggressive location policies have long been required to reverse the trend, he added.
The building sector, which has experienced a severe decrease in incoming orders, will have a significant impact on the shrinkage of the German economy in the second half of the year, according to Ralph Solveen, economist at the German Commerzbank.
Source: Xinhua