Europa Posted on 2025-07-07 10:45:00

German industrial production exceeds expectations - Growth was driven by automobiles, energy and pharmaceutical sectors

From Kristi Ceta

German industrial production exceeds expectations - Growth was driven by

German industrial production rose in May, exceeding economists' expectations, driven by the automotive, energy and pharmaceutical sectors.

German industrial production rose more than expected in May, boosted by the auto industry and energy production, the federal statistics office said. Output rose 1.2% last month, compared with analysts polled by Reuters who had forecast it would be unchanged at 0%.

"It is too early to have a complete answer, but signs of a cyclical recovery, albeit at low levels, are increasing," explain sector experts.

However, in the short term, downside risks have increased due to ongoing trade tensions, the strengthening of the euro, as well as the dry and hot summer so far, which has lowered water levels in Germany's rivers.

While production levels are still well below those seen during the initial phase of the post-pandemic recovery, there has been upward momentum for several months. Output in April and May was slightly above the first-quarter average, fueling hopes that the industry has fundamentally changed, economists say.

Although gross domestic product is unlikely to expand in the second quarter, growth should continue in the coming quarters, with policy changes providing a significant boost next year. The German government has approved a tax relief package to stimulate investment and get the economy back on track after two years of contraction.

May output was boosted by a 4.9% expansion in the automotive industry compared to April, as well as a 10.8% increase in energy production in the same period. A 10% boost in pharmaceutical production in May also had a positive impact on the overall result. Analysts explain that May's positive figures are partly due to tariff tensions in the pharmaceutical sector, referring to the US buying more from Germany before the new tariffs take effect.

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