The timing as well as the headlines of my monthly review of the German economy do not get any better: I did not manage to finish this report earlier than the one before and in the headline I simply exchanged „debt“ for „tariffs“ (cf. here). Well, both facts might be a symbol for the German current economy: boring and too late. But hey, let’s get into the details:
Already before the Trump/von der Leyen-deal (with which I will deal next month) it became apparent that the „lofty“ forecasts as to the potential growth of German GDP in 2025 were not really taking into account the potential set-back inflicted by Trump’s tariffs. In it’s monthly report, the German Bundesbank remains pessemistic and forecasts a stalling economy till year end (here and here, in German).
The German DAX price index (for an explanation, why I prefer this index, cf. here) started at 8,965 points on 2nd June, climbing to 9,105 points on 6th June before crashing 8,638 points on 19th June before recuperating to 8,957 points on 30 June. All-in-all, the index lost 8 points in the course of June – hence, barely moved in the end.
Not unexpectedly, German industrial orders took a hit in May: after crashing by -7.0% (MoM, -2.6% YoY) in January and remaining unchanged (0.0% MoM, -0.2% YoY) in February, orders increased by 3.6% (MoM, even 3.8 YoY) in March, by another 0.6% (MoM, even 4.8% YoY) in April, before now decreasing by -1.4% (MoM, but still +5.3% YoY in May 2025.
There against, Germany’s industrial production grew but continues with its zig-zag-course: after gaining 2.0% (MoM, -1.6% YoY) in January, decreasing by -1.3% (MoM, even -4.0% YoY) in February, again increasing by 3.0% (MoM, -0.2% YoY) in March, decreasing by another -1.4% (MoM, even -1.8% YoY) in April, before now growing by 1.2% (MoM, still 1.0% YoY) in May 2025.
German exports, though, decreased: after decreasing by -2.5% (MoM, -0.1% YoY) in January, increasing by 1.8% (MoM, +0.1% YoY) in February, by another 1.1% (MoM, even 2.3% YoY) in March before decreasing by -1.7% (MoM, -2.1% YoY) in April and now by another -1.4% (MoM, but +0.4% YoY) in May 2025. For other German KPI’s, I refer you, first, to the usual „Destatis Deutschland-Dashboard“ (here) and the „Data Commons (Germany)“ (here), but also to the new IWH Forecasting Dashboard and the DATEV Mittelstandsindex.
The German Target 2 balance lost another Euro 15bn in May 2025 and ended at Euro 1,051bn. The German inflation-rate remained unchanged: starting from its peak of 10.4% in October 2022, the rate decreased to finally 1.6% in September 2024 but has re-increased to finally 2.6% in December 2024, before again decreasing to 2.3% in January, where it remained in February, before further decreasing to 2.2% in March, to 2.1% in April where it again remained in May 2025 before reaching 2.0% in June 2025 (each YoY).
The German Labor market literally stalls: After rising to 6.4% in January, unemployment remained at this level in February and also in March, before decreasing by a marginal -0.1% to 6.3% in April, to 6.2% in May where it remained in June 2025 (all MoM). After the spell of 23 months of uninterrupted increases had been broken in the previous month, German insolvency filings again increased, though moderately: After increasing by 14.1% in January, 12.1% in February,“only“ 5.7% in March and 3.3% in April, then falling by -0.7% in May, before again increasing (moderately) by +2.4% in June 2025 (all YoY; cf. my then most recent comment, here, in German).
The leading German sentiment indicators were positively in sync: The German (Industrial) Purchasing Managers’ Index (PMI) increased by 0.7 points to 49.0 points in May 2025. Also, the ZEW Indicator for business expectations gained some 22 points and ended at 47.5 points in June 2025. The ifo Business Climate Index, too, rose to 88,4 points in June, 0.9 points compared to May 2025. The GfK-consumer index, slighty increased to -20.0 points in June 2025.
To sum up: The sentiment indices were all rising, but from very deep holes. And already now, before the reality of the tariffs agreed upon actually hit the economy, the „hard“ economic KPI of orders, exports and unemployment are shaky to say the least. There was in fact nothing of the usual „spring boom“ („Frühjahrsaufschwung“) before entering summer. Let’s hope that until autumn politics and economy have figured out on how to grow the economy.