The largest drop in almost a year was the industrial production of Germanyanother blow to Europe’s largest economy, which is swinging by limited trade conditions and duties of the US.
Industrial production in Germany decreased by 1.9% in June compared to the previous month, mainly due to machinery and equipment, pharmaceuticals and foods, much more than economists had foreseen. The data for May were revised in slight shrinkage and the total decrease for the second quarter is now 1%, according to Destatis on Thursday (07.08.2025).
The report reinforces the signs of concern emitted by German export companies, now that the US government’s duties have become a reality.
Porsche and Audi are among the automakers that have reduced their forecasts, while others have highlighted the growing lack of supply that is in danger of harm growth. May’s “abnormally high revision” was due to automakers’ corrections, the Statistical Service said.
The sluggish demand from countries outside the eurozone was responsible for the unexpected decline in factories’ orders in June, according to separate data published on Wednesday, with minimal evidence indicating an imminent recovery.
The Bundesbank predicts that the economy will remain stagnant in 2025, after a long recession for most of the previous two years.
However, there are some rays of hope. Confidence is gradually increasing thanks to the investment plans of some of Germany’s leading companies and the prospects for significant increase in public spending on infrastructure and defense.
This should also enhance growth in the long run. For the following year, economists foresee an extension of 1.1%, which is expected to accelerate to 1.6% in 2027.
A separate report showed that Germany’s trade balance was reduced to € 14.9 billion due to the increase in imports. This is the smallest deficit of the last eight months.