Chart of the Week
Like Canada and the United Kingdom, the Eurozone benefited in the first quarter from an increase in U.S. imports driven by anticipation of higher tariffs. Since April, however, this trend has reversed, leading to a decline in European exports.
However, German industrial production is showing signs of stabilization. In May, it grew by 1.2%, surpassing expectations thanks to strong performances in the automotive sector (+4.9%) and the pharmaceutical sector (+10%).
OUR ANALYSIS
With the manufacturing PMI improving in June to its highest level since summer 2022, these better-than-expected figures seem to indicate that German industrial production in Q2 could be higher than the Q1 average and that industry should not weigh significantly on growth figures. However, vigilance remains key, given the current slowdown in exports and the uncertainties surrounding the expected trade agreement between Europe and the United States.
Monitoring June’s data will be key, as orders fell in May (-1.4%) after a strong April, though the decline was less pronounced than initially feared. Even so, Germany’s industrial sector continues to show promising signs, which could support regional activity indicators and strengthen market confidence in the positive momentum emerging in Germany.
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Written on July 11 2025. Opinions subject to change.
See also: A banking sector still undervalued
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