German industrial output points to weak growth
GERMAN industrial production rebounded in June, official data showed yesterday, but analysts warned that the expansion won’t redeem a sluggish second quarter for Europe’s biggest economy.
Industrial output posted growth of 0.8 percent in June compared with May, preliminary data adjusted for price, calendar and seasonal effects from the federal statistics office Destatis showed.
It was a slightly weaker performance than expected ahead of August 12’s quarterly GDP growth announcement, as analysts surveyed by Factset had predicted 0.9pc growth.
Growth in June meant a turnaround from May’s unexpected 0.9pc shrinkage, which Destatis yesterday revised down from the preliminary figure of 1.3pc.
The latest release completes a picture of a 1pc decline in production over the second quarter.
June’s increase “comes too late to make a disappointing quarter for German industry a good one”, economist Carsten Brzeski at ING Diba bank wrote.
But the figures “take away some fears of a hard landing of the German economy in the second quarter”, he went on.
“GDP will post only a small gain at best” based on the production figures and other key indicators, Ralph Solveen of Commerzbank predicted.
Looking to individual sectors, manufacturing saw production growth of 1.5pc while construction shrank by 0.5pc.
Analysts noted that manufacturing growth in June was unsurprising, as May saw a large number of public holidays cut into output – especially in the automotive sector.
Meanwhile, another weak showing for construction confirmed that slowing production over the second quarter was “largely traceable to delays due to bad weather in the construction sector”, the economy ministry said in a statement.
Looking ahead, observers saw little prospect of a resurgent German economy over the second half of the year. –