ifo Institute: German Industry Expects Slight Increase in Production
German industry expects production to increase over the coming three months. Sentiment improved in June for the second time in a row, with the ifo production indicator rising from minus 19.5 points in May to plus 4.3 points in June. This is the second largest increase in this indicator since German reunification. For the first time in three months, companies that want to expand their production are in the majority.
A sense of positive anticipation pervades the automotive industry. Its index surged to plus 50 points from plus 24 points in May. The mood among drinks manufacturers has improved significantly, too, with the index rising in June to plus 19 points after hitting minus 24 points in May. This is an enormous jump of 43 points compared to the previous month. The only industries with larger increases were the manufacturers of rubber and plastic goods, which went up to plus 9 points from minus 36 in May, and the clothing industry, which surged to minus 33 points from minus 84.
The food industry expects to expand production. Its index rose to plus 18 points, climbing up from minus 3. The vast majority of furniture and pharmaceutical manufacturers also expect to expand production; in June, each segment was at plus 11 points. Among chemical companies, the indicator rose to plus 9 points in June after minus 17 in May, to plus 8 points for manufacturers of printed products, and to 0 points for leather goods producers (up from minus 29 points in May).
The mood among mechanical engineering companies remains subdued, with the majority of those surveyed not expecting to expand production in the next three months. Their production index rose in June to minus 26 points after minus 33 points in May. In metal production and processing, the index rose to minus 20 points from minus 36 in May. The index climbed to minus 16 points in June for manufacturers of wood and straw products, to minus 15 for computer manufacturers, and to minus 13 in the textile industry. Manufacturers of metal products and of electrical equipment each saw their index rise to minus 8 points; for makers of glassware, it rose to minus 3; and in the paper industry, up to minus 2.
The German Federal Statistical Office will publish its May figures for industrial production on Tuesday, July 7.
