Ger­man econ­omy ro­bust de­spite Sep­tem­ber blues Fresh dip in in­dus­trial out­put, ex­ports

Kuwait Times - - BUSINESS -

Ger­many’s econ­omy re­mained ro­bust in the third quarter even in light of a fresh dip in in­dus­trial pro­duc­tion and ex­ports, an­a­lysts said yes­ter­day, but Brexit fears re­main on the hori­zon.

In­dus­trial pro­duc­tion slipped by 1.8 per­cent, cor­rected for price, sea­sonal and cal­en­dar ef­fects, in Sep­tem­ber com­pared with the pre­vi­ous month, the fed­eral sta­tis­tics of­fice Des­tatis said. That was a much steeper slide than pre­dicted by an­a­lysts sur­veyed by Fact­set who had ex­pected a 0.4-per­cent drop. The sta­tis­tics of­fice also re­vised up the level of month-on-month growth in Au­gust, from a 2.5 pre­lim­i­nary read­ing to 3.0 per­cent. Mean­while, a 0.7-per­cent fall in ex­ports com­pared with Au­gust, ad­justed for sea­sonal swings, cut Ger­many’s trade sur­plus as it out­paced fall­ing im­ports.

A state­ment from the econ­omy min­istry greeted “slightly pos­i­tive pic­ture” of 0.3-per­cent quarter-on-quarter growth in in­dus­trial pro­duc­tion over the three months from July to Sep­tem­ber.

Fewer pub­lic hol­i­days in the fourth quarter and a slight pick-up in in­dus­trial or­ders and other eco­nomic in­di­ca­tors could point to faster growth in the months ahead, the min­istry state­ment read.

‘Mo­men­tum to con­tinue’

“Monthly data is volatile,” econ­o­mist Flo­rian Hense of Beren­berg bank said, adding that weak Sep­tem­ber data “is not the start of a new trend.” “Eco­nomic ac­tiv­ity is un­likely to lose mo­men­tum at the end of the year,” an­a­lyst Ste­fan Ki­par of Bay­ernLB bank agreed.

Ger­many has seen pos­i­tive pur­chas­ing man­agers’ sur­veys, an in­di­ca­tor of fu­ture ac­tiv­ity, while busi­ness con­fi­dence hit a two-year high in October af­ter a slump fol­low­ing Bri­tain’s June vote to quit the Eu­ro­pean Union. A first es­ti­mate of GDP growth in the third quarter is slated for No­vem­ber 15, and an­a­lysts sur­veyed by Fact­set pre­dict growth of 0.3 per­cent-slightly slower than the 0.4 per­cent achieved in the sec­ond quarter and a big slow­down from the 0.7 per­cent reached be­tween Jan­uary and March.

But some ob­servers ex­pect growth to re­bound in the last three months. “Signs are mount­ing that Ger­man com­pa­nies have al­ready been chang­ing into for­ward gear,” said An­dreas Rees of Uni­credit. The Bun­des­bank, the Ger­man cen­tral bank, ex­pects the coun­try to achieve growth of 1.7 per­cent across 2016 as a whole, while the fed­eral gov­ern­ment in October raised its fore­cast to a slightly more op­ti­mistic 1.8 per­cent.

Be­yond De­cem­ber, “a few clouds are dark­en­ing the hori­zon with the Bri­tish Brexit trig­ger in the new year,” Bay­ernLB’s Ki­par said.

Bri­tish Prime Min­is­ter Theresa May has vowed to launch the UK’s two-year ne­go­ti­a­tion to quit the Eu­ro­pean Union by the end of March.

Fears over Bri­tain’s eco­nomic prospects have sent the pound tum­bling since the June 23 ref­er­en­dum, hit­ting in­come for Ger­man com­pa­nies that sell to the is­land na­tion. — AFP

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