Published by Global Banking and Finance Review
Posted on August 7, 2025
By Maria Martinez
(Reuters) -Germany's industrial output fell in June to its lowest level since the pandemic in 2020, extending last year's declines amid weakening foreign demand and increasing competition from China, while exports rose more than expected, data showed on Thursday.
Industrial output dropped 1.9% month-on-month, the federal statistics office said, exceeding the 0.5% decline forecast in a Reuters poll of analysts.
Production reached its lowest point since May 2020, when the pandemic triggered a sharp contraction, the office added.
A three-month comparison showed a 1.0% decline in production in the second quarter, marking a return to levels last seen in the first half of 2020.
It had previously seemed that German industrial production was rebounding this year after falling sharply in 2024, but the new data shows that the downward trend continued in 2025, Franziska Palmas, senior Europe economist at Capital Economics, said.
"The medium term outlook for German industry remains poor as weak growth in both Europe and China, and rising competition from Chinese producers is likely to weigh heavily on demand for German industrial goods," Palmas added.
The statistics office also revised the data for May to a 0.1% drop from the previous month, compared with a provisional figure of a 1.2% increase. The office attributed the revision to corrections from establishments in the automotive sector.
Production was down 1% quarter-on-quarter in the second quarter, which means industry subtracted around 0.3% from GDP last quarter, Palmas said.
Separately, German industrial orders fell unexpectedly by 1% in June, marking the second consecutive month of decline due to reduced foreign demand, data released on Wednesday showed.
An unwelcome side effect of Thursday's figures could be a downward revision of the first GDP growth estimate for the second quarter, Carsten Brzeski, global head of macro at ING, said.
Germany's economy contracted by 0.1% in the second quarter, the first estimate showed, as demand from the U.S. slowed following months of strong purchases in anticipation of tariffs.
"Our previous view that the German economy would at least experience a cyclical rebound has come under enormous pressure," Brzeski said. "At face value, industry remains stuck in a very long bottoming out."
EXPORTS RISE
German exports rose 0.8% month-on-month in June, surpassing the 0.5% increase predicted by analysts.
Exports to European Union countries increased by 2.4%, while shipments to non-EU nations fell 1.2%, the statistics office said.
Exports to the United States dropped 2.1% compared with May, marking a third consecutive monthly decline and reaching their lowest value since February 2022.
Germany's export-oriented economy is expected to be badly affected by U.S. tariffs. The U.S. was Germany's biggest trading partner in 2024 with two-way goods trade totalling 253 billion euros.
Imports rose by 4.2% on a calendar and seasonally adjusted basis compared with May, the office said.
Germany's foreign trade surplus narrowed to 14.9 billion euros ($17.39 billion) in June, down from 18.5 billion euros in May and 20.3 billion euros in June of 2024.
($1 = 0.8566 euros)
(Additional reporting by Ozan Ergenay and Amir Orusov in Gdansk; Editing by Ludwig Burger, Kirsti Knolle, Jacqueline Wong and Andrew Heavens)
