Blow for Germany as companies report weak recovery
Fresh fears are growing for the German economy after factory orders rebounded by less than hoped for in May.
Orders climbed 10.4pc in the month as the country emerged from lockdown, according to the Federal Statistical Agency. But this followed a slump of more than 37pc in the two months before – the biggest fall since records began in 1991.
The country's economy ministry said: "The orders data signal that the manufacturing sector recession has overcome its low point.
"But the low level of orders also shows that the recovery process is far from over."
Domestic orders rose 12.3pc while orders from abroad only climbed by 8.8pc, illustrating the sector’s reliance on a wider recovery worldwide.
Germany has weathered the coronavirus crisis better than most of its neighbours, suffering fewer deaths. It has also fared better in economic terms, partly because factories and construction sites were allowed to stay open.
The government has supported the economy with massive rescue and stimulus packages including a short-time work scheme, but nonetheless expects GDP to shrink by 6.3pc this year in the nation's worst recession since the Second World War.
Economist Carsten Brzeski, of ING, said: "Today's industrial orders data bring two important messages: the lifting of the lockdown measures has brought V-shaped surges in activity but the return to pre-crisis levels will not be easy.”
It came as the influential Munich-based Ifo Institute's monthly survey found that one in five German firms are at risk of failure.
Stefan Sauer, an IFO researcher, said: “We could see a wave of insolvencies in the coming months.”
The companies which reported the highest levels of insecurity were mainly in the service sector: travel agencies, tour operators, hotels and restaurants, followed by firms in the creative industries, then by manufacturers.
Wolfgang Schaeuble, the speaker of the German parliament and former finance minister, called for the "excesses of globalisation" to be corrected in the wake of the coronavirus crisis.
Mr Schaeuble argued that the fact Europe had suffered from shortages of basic items such as face masks means that it must change supply chains and manufacture more goods domestically.
Writing in a guest editorial for the Frankfurter Allgemeine Zeitung newspaper, Mr Schaeuble also called for the European Union to seize on the crisis and push forward with more economic integration.
He said the EU had missed a chance to do this in the wake of the 2010 financial crisis, adding that monetary union had been meant to lead towards economic union but this never happened.
