Don't bank on a German industrial resurgence

Data published last week revealed that production fell in all four of the euro-zone’s largest economies in May. But the downturn in Germany has been most disappointing given hopes that this industrial powerhouse might drive an economic revival in the euro-zone as a whole. The German industrial recovery may not be over - recent weakness has partly reflected temporary factors including the timing of public holidays. But industrial surveys, data on new orders and our own forecasts for global demand point to continued modest growth rather than a marked resurgence. This will not be enough to dramatically alter the prospects for the single currency area.