(Bloomberg) -- German factory orders rose less than expected in May even after authorities loosened the coronavirus lockdown, highlighting how difficult it will be to repair the pandemic's damage.
Orders rose 10.4% in May, following a cumulative slump of more than 37% in the previous two months. The Economy Ministry said that while the data suggest Germany's industrial recession has passed the trough, “the low level of orders also indicates that the catch-up process won't be completed for a long time.”
The country and its European neighbors have only just started down a long road back to normal. Policy makers have cautioned against reading too much into initial signs of a rebound and argued that overall activity will probably remain below pre-crisis levels for some time.
The situation in other parts of the world is more uncertain. The virus is spreading rapidly in the U.S., and China is facing intensifying disputes with Washington and risks of a second-wave of infection.
German factory orders from outside the euro area rose a mere 2% in May, while demand from within the currency bloc jumped more than ten times as much. Investment goods saw a particularly pronounced pickup.
| May | April | |
|---|---|---|
| Basic goods | 0.4% | -22.4% |
| Investment goods | 20.3% | -31.6% |
| Consumer goods | 4.7% | -11.3% |
As a manufacturing powerhouse, Germany had been particularly affected by factory closures, supply-chain disruptions and a global erosion of demand. Airbus SE is planning to shed 15,000 jobs, more than 10,000 of those at its main bases in Germany and France. Carmaker Daimler AG has said the industry will face painful cutbacks because of the crisis.
What Bloomberg's Economists Say:
“The below-consensus pickup in German factory orders shows that getting back to normal is hard to do. Containment measures across the German economy were lifted in May, unlocking a path to recovery. But with trading partners slower out of the gatesand supply chains disrupted, it was a tougher month for manufacturers than we thought.”
--Jamie Rush, Chief European Economist. For full REACT, click here
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