Ger­man econ­omy ro­bust de­spite Septem­ber blues

The Myanmar Times - - International Business -

GER­MANY’S econ­omy re­mained ro­bust in the third quar­ter even in light of a fresh dip in in­dus­trial pro­duc­tion and ex­ports, an­a­lysts said, 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.

The sta­tis­tics office also re­vised up the level of month-on-month growth in Au­gust, from a 2.5 pre­lim­i­nary read­ing to 3pc.

Mean­while, a 0.7pc 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 a “slightly pos­i­tive pic­ture” of 0.3pc quar­ter-on-quar­ter growth in in­dus­trial pro­duc­tion 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.

“Monthly data is volatile,” 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 de­ci­sion 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 0.3pc – slightly slower than the 0.4pc achieved in the sec­ond quar­ter and a big slow­down from the 0.7pc 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 1.7pc across 2016 as a whole, while the fed­eral govern­ment in Oc­to­ber raised its fore­cast to a slightly more op­ti­mistic 1.8pc.

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 although the courts are con­test­ing it.

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. –

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