German economy looking robust
GERMAN industrial production fell in September after surging a month earlier, but output still grew 0.8 percent in the third quarter and should increase further in the months ahead.
The country’s economy ministry said industrial output fell 1.6 percent in September after rising 2.6 percent in August, the biggest gain in more than six years. It said a breakdown of its data showed a sharp drop in the production of capital goods.
But industrial activity remained “very lively” and production rose 0.8 percent in the third quarter as a whole, the ministry said, adding: “Overall, industrial production should expand further in the coming months.”
Figures from the ministry on Monday showed that industrial orders rose unexpectedly in September, driven by demand from other euro-zone countries for capital goods. That suggests the economy will extend its expansion in the coming months.
“Despite today’s setback, all ingredients are in place to see a resurgence of industrial activity in the coming months,” ING economist Carsten Brzeski said.
Despite protracted talks on forming a new German coalition government, Brzeski said, “spending more money, in our view, remains the easiest-to-agree-on common denominator for any next German government. Therefore, keep your seat belts fastened; the fast ride of the German economy should continue soon.”
Despite weeks of exploratory discussions, Chancellor Angela Merkel’s conservatives, the pro-business Free Democrats and the Greens remain far apart on a range of issues as they try to form a three-way coalition.
Helping the coalition negotiators is the strong economy, which is generating a budget surplus that leaves room to satisfy all sides, to some degree, by paying for both tax cuts and investment in areas such as upgrading infrastructure.
Germany’s DIHK Chambers of Industry and Commerce last month raised its growth forecast for Europe’s biggest economy to 2 percent for this year from its previous estimate of 1.8 percent, and saw even stronger expansion next year.
Gross domestic product growth data for the third quarter will be published this month. Underlining the health of the economy, BMW yesterday raised its outlook for pre-tax profit this year, although third-quarter earnings fell on upfront costs for new technologies and models. It is counting on record sales of luxury cars. – Reuters