Germany’s Industrial Production Drops Sharply While Exports Beat Expectations

Germany’s industrial sector showed renewed signs of weakness in June, as monthly output fell by 1.9%, the sharpest drop since the height of the COVID-19 crisis in 2020. The figure surprised economists who had anticipated a more modest decline of 0.5%, indicating that the eurozone’s largest economy continues to face mounting headwinds.

The disappointing data was compounded by a revision to May’s numbers, which were adjusted from a 1.2% gain to a marginal 0.1% contraction. Analysts pointed to broad-based softness across manufacturing, construction, and energy production, with particular strain evident in the automotive and machinery sectors.

Despite the downturn in industrial activity, Germany’s export performance provided a measure of relief. Overseas shipments rose 0.8% in June, surpassing expectations, driven largely by stronger demand from within the European Union. However, exports to non-EU countries, including the United States, declined—adding to concerns about weakening global trade dynamics.

Germany’s trade surplus narrowed to €14.9 billion in June, a notable drop from €18.5 billion the previous month. Economists warn that the divergence between output and exports may not last, especially if external demand begins to fade further in the second half of the year.

Overall, the latest figures suggest that Germany’s manufacturing-led recovery remains fragile. With industrial orders also trending lower and global uncertainties on the rise, policymakers and investors alike may need to temper their expectations for a near-term rebound.