Germany's orders rebounded sharply in May after a devastating run of extreme weakness in March and April. Still over the last 24 months, there have only been eight monthly increases as there has been a period of weakness that preceded the impact of the coronavirus. Even with the sharp rebound of orders in May, the trends remain astonishingly weak.

Concerns over world trade in the midst of the U.S.-China dispute as well as a still unresolved situation between the U.K. and EU over post-Brexit trade relations have hammered German trade and industrial orders. The drop in German orders loaded a 26.2% decline in April on top of a 15.0% drop in March. May brings a sharp rebound with a gain of 10.4% in overall orders as foreign orders gain 8.8% with domestic orders gaining back 12.3%. Still, it is not enough to revive the trend.

Orders overall are falling by over 20% to over 30% over 12 months overall and across categories. And this is after orders have fallen by 7% to 9% over the previous 12 months.

The economic shutdown in Germany and globally has hit German industry hard. Germany depends importantly on international trade. That has been drying up as the U.S.-China trade war raged and then as the reactions to the coronavirus added a more lethal and much sharper downtrend to the muddy trends already in place.

However, the Baltic dry goods index, an important indicator of global trade volumes, shows a significant counterpoint that demonstrates a revival in world trade patterns. And while the gain looks large on the daily chart, it is in fact still a small and gradual recovery that is progressing. But it is a recovery and it is progressing.

German orders and sales both have imploded and both show a May rebound that still leaves the implosion in gear. For example, despite a really substantial 30.7% increase in real sales of capital goods in May, sales of capital goods are deflating at a 78.0% annual rate over three months, a 53.6% annual rate over six-months and by 33.7% over 12 months. The rebound in May, substantial as it is, remains dominated by the past weakness. Two months into the new quarter, the quarter-to-date sales are still extremely weak.

The Germany economy remains in a deep hole. But it is clearly in the process of digging out. Still, the dig out looks like it will take a good deal of time. The virus continues to hover and it has come back in some regions as all of this makes it unclear just how completely and how fast economies can return to their former state of existence. Policy-makers remain wary and are not exuding optimism but rather promoting a cautious step-by-step increase in output and approach to recovery.