By Don Nico Forbes

German manufacturing orders rose in May, showing tentative signs of stabilizing despite continued uncertainty from the Middle East conflict.

Factory orders rose 1.9% on month in May, following a 3.2% decline in April, data agency Destatis said Monday. Economists polled by The Wall Street Journal had expected a smaller increase of 0.7%.

In the less volatile three-month comparison, new orders from March to May 2026 were 0.2% lower than in the previous three months, Destatis said.

Growth in orders for May was largely attributable to a jump in other-vehicle construction, including aircraft, ships, trains, and military vehicles. New orders in this sector were up 85% on month, driven by several large contracts, Destatis added.

Germany's manufacturers have faced a difficult backdrop this year. Elevated energy prices following the conflict between the U.S. and Iran pushed up costs for businesses, while uncertainty over the global trade outlook has weighed on investment decisions and export demand.

Still, the conflict in the Middle East has provided a boost to parts of German manufacturing, according to Carsten Brzeski, global head of macro at ING.

"The initial support came from stockpiling and more recently, some companies have benefited from Asian competitors being more exposed to disruptions affecting trade routes through the Strait of Hormuz," he said.

German industry is also expected to benefit over the medium term from the country's planned infrastructure and defense spending program, valued at more than $1 trillion over the coming years, although economists expect the impact to emerge only gradually.

But despite the rebound in May, momentum in German industry is expected to remain weak, said Marco Wagner, senior economist at Commerzbank.

"On the one hand, the Iran conflict remains a source of uncertainty, and peace is far from a done deal. On the other hand, German companies continue to suffer from an erosion of the country's competitiveness," he said.

The figures come after the European Central Bank raised interest rates last month, with policymakers not yet ruling out another hike as they assess the broader price impact of the energy shock from the war in Iran.

Write to Don Nico Forbes at don.forbes@wsj.com