German Economy Shows Cautious Signs of Recovery: Industrial Orders and Services Are on the Rise

After several months of weak performance, there are increasing signs that the German economy is stabilizing. Companies in both the manufacturing and service sectors have recently reported higher sales and order intake again. However, the latest figures from the Federal Statistical Office also show that the recovery remains fragile and is heavily influenced by individual industries and large orders.

Industrial Orders Rise Surprisingly Sharply

In May 2026, order intake in the manufacturing sector rose by 1.9 percent on a price-adjusted basis compared with the previous month. Even excluding large orders, growth still amounted to 1.0 percent. Compared to the same month last year, the volume of orders was even 6.2 percent higher.

The “other vehicle manufacturing” sector—which includes, among other things, aircraft, ships, rail vehicles, and military vehicles—performed particularly well. There, order intake rose by an exceptional 85 percent compared to the previous month due to several large orders.

Mechanical engineering (+3.7 percent) and the manufacture of electrical equipment (+5.7 percent) also recorded significant growth. By contrast, the automotive industry (-3.8 percent) and manufacturers of data processing, electronic, and optical products (-7.8 percent) once again weighed on the figures.

European Demand Gains Importance

Overall, foreign demand developed positively, rising by 2.2 percent in May. The strong performance within Europe is particularly noteworthy. Orders from the eurozone rose by 11.2 percent, while orders from countries outside the eurozone declined by 3.2 percent.

Domestic demand also proved robust, rising by 1.3 percent compared with the previous month.

However, a look at the longer-term trend puts the positive monthly performance into perspective. In a three-month comparison, orders received between March and May were slightly below the level of the previous three months. Excluding large orders, however, the picture is significantly more positive, with growth of 4.1 percent.

Industrial sales are also picking up

Not only orders but also sales showed positive trends. Real sales in the manufacturing sector rose by 1.8 percent in May compared to the previous month and were thus 4.2 percent above the previous year’s level.

The figures suggest that, after a prolonged period of weakness, the industrial sector is regaining momentum, at least temporarily. Whether this will lead to a sustained turnaround, however, is likely to depend largely on international demand and geopolitical conditions.

Service Sector Remains a Growth Driver

The services sector has also shown positive development recently. In April 2026, real revenue rose by 1.4 percent compared to the previous month. Compared to the same month a year earlier, there was a moderate increase of 0.3 percent.

The strongest growth came from professional, scientific, and technical services, which rose by 3.0 percent. Other business services also grew significantly, with an increase of 2.2 percent.

Moderate growth was also recorded in the sectors of information and communication (+0.6 percent), transportation and logistics (+0.5 percent), and real estate and housing (+0.9 percent).

No All-Clear Yet for the German Economy

The latest figures offer tentative signs of stabilization in the German economy. In particular, rising industrial orders and robust performance in the services sector suggest that the economy could be slowly recovering after a prolonged period of weakness.

At the same time, however, the data also show how heavily the trend continues to depend on individual large orders, European demand, and industry-specific factors. Therefore, it is still too early to speak of a broad-based and sustainable economic recovery. For companies, startups, and investors, the key question remains whether the current signs of stabilization will indeed give rise to a resilient growth trend in the second half of the year.