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