Germany's manufacturing sector lost momentum in May 2025, as real new orders fell by 1.4 percent from the previous month. When large-scale contracts were excluded, the picture was even gloomier, revealing a sharper 3.1 percent decline, signalling weakness in underlying demand. Despite this, year-over-year figures remained positive at 5.6 percent, largely due to a strong April, which was revised upwards to 1.6 percent.

The drop was led by a dramatic 17.7 percent fall in orders for computers, electronics, and optical products, a reversal following a spike in April's large orders. Electrical equipment and metal processing also declined. However, there were bright spots, including surging orders for metal products (18.2 percent) and other vehicles like trains and ships (6.8 percent).

By product type, investment and intermediate goods slipped, while consumer goods showed resilience (3.1 percent). Domestically, demand weakened significantly (minus 7.8 percent), while foreign orders rose (2.9 percent, bolstered by strong demand from outside the Eurozone (9.0 percent).

Manufacturing turnover echoed the slowdown, declining by 1.9 percent month-over-month and 1.7 percent year-over-year. In essence, the data reflect a sector under pressure, with sporadic strengths overshadowed by shrinking domestic demand and reduced industrial momentum. These updates bring the RPI to minus 24 and the RPI-P to minus 14, indicating that economic activities are now significantly behind the expectations for the German economy.

Orders expected up another 0.2 percent on the month after rising 0.6 percent in May. On year, sales expected up 5.6 percent, better than the 4.9 percent in April.

Manufacturers orders are a leading indicator for industrial production. The figures are calculated every month by the Federal Statistical Office and represent the value of all orders for the delivery of self-made products confirmed by industrial enterprises with 50 or more employees in the respective reporting period. The results are broken down by both sector and region of origin (domestic and foreign split into euro area and non-euro area). Monthly volatility can be very high so moving averages give a much better guide to underlying trends.

Manufacturers orders data are keenly awaited by analysts each month. The data present a detailed breakdown by various sectors and a reading of the pulse of a major sector of the economy. Like the PPI, manufacturing orders data exclude construction, which is the preferred Eurostat measure.

The manufacturers orders data rank among the most important early indicators for monitoring and analyzing German economic wellbeing. Because these data are available for both foreign and domestic orders they are a good indication of the relative strength of the domestic and export economies. The results are compiled each month in the form of value indexes to measure the nominal development of demand and in the form of volume indexes to illustrate the price-adjusted development of demand. Unlike in the U.S., orders data are not collected for all manufacturing classifications - but only those parts in which the make-to-order production plays a prominent role. Not included are, for example, mining, quarrying and the food industry.