German industrial production remains under pressure in May

by David Fleschen

Flaring trade conflicts, the unresolved Brexit question and the continuing weakening of the automotive industry continued to plague German industrial production in May. This is shown by the current survey results on the IHS Markit / BME Purchasing Manager Index (EMI). At 44.3 points, the key leading indicator for the manufacturing industry of Europe's largest economy was only marginally below the April value (44.4) in the month under review, thus remaining at one of the lowest levels since mid-2012. At the same time, the PMI is already fifth Month after month, below the growth threshold of 50.0 points, the British financial services provider IHS Markit announced.

"At first glance, the current EMI data continue to paint a rather negative picture of the German industrial sector. However, there are increasing signs of a degree of stabilization in the manufacturing sector, "emphasized Dr. Silvius Grobosch, Managing Director of the Federal Association of Materials Management, Purchasing and Logistics e.V. (BME) on Wednesday in Eschborn. So there are bright spots in the EMI sub-indices industrial production and new orders. "What's also pleasing to our buyers is that procurement prices fell slightly in May thanks to declining industrial commodity prices," added Grobosch.

"After more than a year of downward movement, the EMI shows some signs of stabilization. However, it needs some imagination, "commented Dr. Gertrud R. Traud, chief economist of Helaba Landesbank Hessen-Thüringen, on Wednesday at BME request the current EMI data. Last but not least, the escalation in the trade conflict between the USA and China and new US trade restrictions on Mexico would certainly be a burden. If Donald Trump does not make any concessions to China or even significantly extend protectionism, there is a risk that the global economy will be in recession. "We recently increased the likelihood of this negative alternative scenario from 20% to 30% and accordingly reduced the base scenario of a gradual upturn from 70% to 60% during the year. Ten percent remains for the positive scenario. Times seem to get heavier. Donald Trump has it in his hands - for better and for worse, "the Helaba Bank Director finally told the BME.

"The German economy is under pressure. Above all, the foreign business creates uncertainty in the local companies, "said DIHK foreign trade expert Kevin Heidenreich on Wednesday the BME. A slower global economy, the trade dispute between the US and China but also Brexit caused lower export expectations in German industry. The companies are facing major economic challenges internationally. Therefore, it is all the more important that the German economy in this country receive tailwind. These included reductions in bureaucracy, faster expansion of transport and IT infrastructure and corporate tax reform for more innovation and investment.

Source: BME, Photo: Fotolia

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