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German production rebounds in May, but misses expectations

BERLIN (AP) — German industrial production picked up in May after dropping sharply in the two previous months, but the rebound fell short of expectations. Production was up 7.8% compared with the previous month, the Economy Ministry said Tuesday. That followed declines of 8.9% in March and a massive 17.5% in April.

Economists had expected an increase of more than 10%. The figure came a day after official data showed a 10.4% gain in factory orders in May, which was also below expectations. Germany’s lockdown was less severe than those imposed in Italy, Spain and France and it never ordered factories closed, but companies did largely stop production in some areas — such as the automaking sector — and supply chains were disrupted. The resumption of car production contributed strongly to the industrial production gain in May, though it remained well below its pre-crisis level.

Germany started easing restrictions on public life on April 20 and the process has gathered pace since. However, the German economy went into a recession in the first quarter that is believed to have deepened in the just-concluded second quarter.

The government is seeking to boost the economy with a 130 billion-euro ($146 billion) stimulus package, including a six-month cut in value-added tax that took effect at the beginning of July. UniCredit bank economist Andreas Rees said that, although the industrial rebound hasn't yet been as strong as expected, retail sales data have been better than expected.

“We still have to wait for more hard data to get a better understanding of the overall picture,” he said. Second-quarter gross domestic product figures are due on July 30.

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