Industrial production in Germany fell by 2.5% in May 2024, the largest drop since late 2022.

France experienced a 2.1% decline in industrial production during the same period.

The downturn affected sectors such as construction, energy supply, automotive, and chemicals due to supply difficulties and weak economic conditions.

Factors contributing to the decline include public holidays, a slowdown in the U.S. economy, trade tensions with China, and labor shortages.

Economists were surprised by the unexpected decrease, having predicted slight growth instead.

Both Germany and France faced challenges in metals manufacturing and construction.

In April, the Euro zone saw a 0.1% decrease in industrial production, missing analyst expectations.

The French statistics agency noted that German activity and order books were below long-term averages, while France's downturn might be a one-off event.

The German government plans to stimulate the economy with measures such as employment incentives, reduced bureaucracy, improved depreciation conditions, and increased research funding, aiming for an additional €26 billion in economic output.

Despite a fifth consecutive month of declining industrial orders, some improvement was seen in energy-intensive sectors.

The overall economic outlook remains subdued, with minimal GDP growth expected and the possibility of a recession.

The Ifo Institute forecasts a modest 0.4% GDP growth for the year, with more substantial growth anticipated in 2025.

Investors are advised to monitor market indicators for potential investment opportunities amidst these economic challenges.