In May, industrial production in Germany dropped more than analysts’ predictions, a clear sign that Europe’s largest economy is still struggling to recover from the debt crisis.

Production fell 1% in May, after an increase of 2% in April, according to the Economy Ministry. This is the first drop since January and analysts predicted a drop of 0.5%. In May, German exports and factory orders also saw a decline, as the economy still struggles to recover from the longest recession since 1999.

“Recent indicators point to some minor problems in Germany,” said Andreas Moeller, an economist at WGZ Bank in Dusseldorf. “But compared with the rest of the euro area, the economy is still solid and will grow throughout this year.”

Manufacturing output dropped 0.7% in May, production of investment goods fell 2.3%, construction was down 2.6% and energy output slumped 1.5%. Although production is weakened, the Economy Ministry believes that “the recovery of the industrial sector should continue in a slightly damped fashion.”

Auto sales in Germany in May fell 10%, with the passenger car registrations down 9.9% to 261,316 units, after an increase of 3.8% in April, according to the Federal Transport Authority. From January to May auto sales in Germany fell 8.8% to 1.22 million units. It’s been five years since automakers have been struggling with sales contraction in Europe, many hoping that the drop this year will not surpass 5%.

Source: Bloomberg


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