Germany industrial output falls 1.9% in June hits pandemic levels due to weak global demand

Germany’s industrial production has returned to levels last seen during the early days of the coronavirus pandemic, signaling deepening economic challenges for Europe’s largest economy. According to the Federal Statistical Office (Destatis), industrial output fell by 1.9% in June compared to the previous month, far exceeding the 0.5% decline expected by analysts [1]. This marks the lowest level of production since May 2020, when the country was reeling from the initial waves of the pandemic [1].

The downward trend has persisted despite earlier indications of a potential recovery in 2025. Revised data showed that May’s preliminary 1.2% increase was adjusted to a 0.1% decline once the automotive sector’s statistics were recalculated [1]. Quarterly data also reflected the weakness, with industrial production falling 1.0% in the second quarter to levels last seen in the first half of 2020 [1].

The decline is attributed to a combination of weak global demand, sluggish international growth, and the intensifying competition from Chinese manufacturers [1]. Industrial orders also dropped unexpectedly by 1% in June, marking the second consecutive monthly decline. Analysts point to reduced foreign demand as the main cause of this ongoing contraction [1].

Despite the domestic manufacturing slump, Germany’s exports posted a 0.8% rise in June compared to May, outperforming expectations. This growth, however, was driven primarily by increased deliveries within the European Union, which saw a 2.4% increase. Exports to non-EU countries, by contrast, declined by 1.2%, with shipments to the U.S. falling 2.1% compared to the previous month [1]. This follows three consecutive months of declines and brings export volumes to their lowest since early 2022 [1]. The downturn comes amid anticipation of new U.S. tariffs under President Donald Trump, which could further strain Germany’s export-reliant economy [1].

The country’s imports also increased by 4.2% in June, reaching €115.6 billion. This contributed to a narrowing foreign trade surplus, which dropped to under €15 billion, down from €18.5 billion in May and €20.3 billion in June 2024 [1].

Economists remain cautiously pessimistic about the outlook. Carsten Brzeski, global head of macro at ING Research, noted that the recent figures raise concerns about Germany’s overall economic performance in Q2, with potential downward revisions to GDP forecasts [1]. Franziska Palmas, senior Europe economist at Capital Economics, added that the medium-term prospects for German industry are bleak, with weak demand from key markets like China and Europe expected to weigh heavily on the sector [1].

Source: [1] Industrial production in Germany returns to pandemic volumes (https://coinmarketcap.com/community/articles/6894e73cd451fb53687c51e0/)