Germany's industrial production rebounded in May, rising by 7.8 percent on the month after falling by a revised 17.5 percent in April, the Statistics Office said on Tuesday, in the latest sign that Europe's largest economy is recovering after lockdown.

The bounce-back, more modest than the 10 percent rise economists had been forecasting, was led by a 27.6 percent surge in production of capital goods. Growth was more modest in other areas and factories churned out fewer intermediate goods.

A host of indicators in past days have shown clear signs that the exporting powerhouse has put the worst of the impact of the coronavirus lockdown behind it: orders for industrial goods rose 10.4 percent in May, rebounding from their biggest drop since records began in 1991 the previous month.

Despite the recovery, production is still well below the levels recorded before the onset of the coronavirus crisis. May output was down 19 percent in calendar- and season-adjusted terms on February, the month before lockdown measures were imposed.

Nonetheless, firms in the sector are optimistic. A survey by the Ifo institute showed that they expect their production to increase in the coming three months.

Germany has withstood the crisis better than most of its neighbors, suffering relatively fewer deaths from the virus. Its economy has also weathered the pandemic better, partly because it let factories and construction sites remain open.

The government is helping the economy weather the crisis with massive rescue and stimulus packages, including rolling out short-time work, a form of state aid designed to encourage companies to keep employees on the payroll during a downturn.

Still, the government expects the economy to shrink by 6.3 percent this year, its worst recession since World War Two.

(Cover image: Workers at the new production line at a factory in Dresden, Germany. /Reuters )