German economy robust despite September blues
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. –