Manufacturing confidence recovered in May to 104 points from the low reached in April (101, lowest level since June 2015). The first improvement came from better domestic order books in a signal that growth of domestic demand eventually started to benefit from the fiscal stimulus implemented since the beginning of the year. The second one was about lower inventories in the car value chain. As a result, carmakers expect now to stabilize their output after about two quarters of contraction, even if inventories are still above the long-term average. Car suppliers’ indicators are following quite the same pattern. However, other sectors involved in the car value chain such as metals and plastics did not benefit from the same improvement in order books (including domestic ones). The main overall weakness is now driven by still weak export order books, in particular for car makers, metals and chemicals. At the same time, car suppliers showed improved export order books in connection with stabilizing conditions for German car makers.
