German industrial output rises for first time in four months

Germany’s industrial production rose 1.3% month-over-month in July 2025, rebounding from a revised 0.1% decline in June and topping market expectations of a 1% gain. The stronger-than-expected print underscores the resilience of Europe’s largest economy at a time when demand conditions across the eurozone remain mixed.

The expansion was broad-based, led by a sharp 9.5% jump in the manufacture of machinery and equipment, signaling renewed strength in capital investment. The automotive industry, a key pillar of German exports, grew 2.3%, while pharmaceuticals climbed 8.4%, helping offset continued weakness in energy output, which fell 4.5%.

When excluding energy and construction, industrial output rose 2.2% from the previous month. Within this, capital goods advanced 3.0%, consumer goods rose 2.1%, and intermediate goods gained 0.8%. Construction output added 0.3%, while energy-intensive industries—previously under pressure from high input costs—expanded modestly by 0.4%.

Despite the monthly rebound, momentum on a broader basis remains subdued. Industrial production was still 0.1% lower in the May–July period compared with the prior three months, highlighting the uneven nature of the recovery. On an annual basis, however, production rose 1.5%, reversing a 1.8% contraction in the previous period, suggesting that the sector is slowly regaining ground after a prolonged slump.

Economists noted that the July figures provide a welcome sign of stabilization in German industry, which has struggled in recent years with supply chain bottlenecks, weak external demand, and energy market volatility. Still, lingering global trade uncertainty and the potential impact of proposed U.S. tariffs on European exports remain key risks for the outlook. Investors will now look to upcoming factory orders and PMI data for further confirmation that Germany’s manufacturing sector is on a sustainable recovery path heading into the second half of the year.