German Industry Rebounds From Virus Nadir Facing Long Road Ahead

(Bloomberg) -- German industrial production rose less than analysts expected in May, underscoring the challenge faced by Europe’s economy as it emerges from months-long coronavirus lockdowns.

Output gained 7.8% in the month when Germany lifted most restrictions to stop the spread of the virus, compared with an estimate of 11.1%. The increase follows a record-hit to activity in April, which was caused by factory closures and other disruptions.

Manufacturing led the recovery with a jump in investment goods. At the same time, capacity remained significantly underutilized, according to the Economy Ministry.

While recent data show that Europe’s largest economy is past the worst of the deepest slump in decades, they also point to a long climb back to pre-crisis levels. Factory orders published Monday rose less than forecast, with the ministry warning that “the catch-up process won’t be completed for a long time.”

With its export-oriented economy, Germany is highly dependent on developments in the rest of Europe and the rest of the world. The rapid spread of the virus in the U.S. and an intensifying dispute between China and Washington underscores the uncertainty of economic forecasts at this point.

The European Commission releases updated projections later on Tuesday.

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