German industrial production rises surprisingly sharply in May

Industrial production in the narrower sense – that is, excluding construction and energy – rose by 0.8 percent in May compared to the previous month. Energy-intensive industries, which are suffering from rising energy prices as a result of the Iran war, increased their production by just 0.2 percent.

Cautious assessment from economists

In the less volatile three-month comparison – from March to May – production was only marginally 0.1 percent above the level of the previous three-month period. In addition, the originally reported 0.4 percent increase in manufacturing production in April was revised downward to 0.2 percent.

Economists therefore remain cautious despite the surprisingly strong May figure. Michael Herzum of fund provider Union Investment spoke of a sign of life – but not yet a comeback. „Die Stabilisierung ist noch kein Aufschwung“, Herzum said. German industry has stopped its downward trend, but the path out of the crisis leads „nicht im Sprint nach oben, sondern im Schneckentempo“. Production has structurally fallen back to the level of 2010.

Jörg Krämer, chief economist of Commerzbank, sees German industrial production continuing to move sideways at a low level despite the May increase. „Mehr ist nicht drin, weil das Reformpaket der Bundesregierung die erodierte Standortqualität trotz einzelner Fortschritte nicht wesentlich verbessert und China der deutschen Industrie zusetzt“, Krämer said. He also pointed to sharply fallen oil prices, which could enable a moderate recovery in the second half of the year.

Outlook for the second half of the year

Jens-Oliver Niklasch, senior economist at LBBW, was notably more confident. He interprets the data as a continuation of a gradual recovery in German industry. „Das ist nicht schlecht, wenn man bedenkt, dass diese Zahlen noch in die Phase des Iran-Krieges fallen, in der die Unsicherheit besonders groß war“, Niklasch said. In his assessment, economic output in the second quarter likely did not decline.

The May data were released on Tuesday by the Federal Statistical Office (Destatis) in Wiesbaden via the dpa-AFX news service. It was also reported that Germany's manufacturing sector performed better than expected in May – however, the monthly production increase in April was subsequently revised downward from 0.4 to 0.2 percent.

Overall, the data paint a mixed picture: a single strong monthly figure stands against an industrial economy that has been weak for years and remains weighed down by high energy costs, competitive pressure from China, and a lack of structural reforms.

Economists agree that the May figure does not mark a trend reversal. Stabilization at a low level is a first step, but according to Herzum, a self-sustaining upturn requires more than monthly one-off effects. Should energy prices continue to fall and foreign demand pick up, the recovery could solidify in the second half of 2026.