German factory orders rebound more strongly than expected in May

Germany's struggling manufacturing sector showed signs of recovery in May, with factory orders rebounding after a setback in April and rising by much more than economists had expected.

Seasonally and calendar-adjusted factory orders increased by 1.9% in May from the previous month, the Federal Statistical Office said on Monday.

Revised data also showed that April's decline was less severe than initially reported, with the drop revised to 3.2% from an earlier estimate of 3.8%.

Large-scale orders partly drove the increase in May. Excluding these, factory orders still rose by 1% month on month.

Thomas Gitzel, chief economist at VP Bank, urged caution despite the stronger figures. "These are not easy times for the German economy," Gitzel said. 

"The automotive industry is undergoing downsizing, creating difficulties for many supplier industries. This is particularly true of the mechanical engineering sector. Although it recorded an increase in orders in May, the overall picture remains bleak."