German Industrial Production Rises Less Than Forecast
German Industrial Output Rises Less Than Forecast
Michele Tantussi/Bloomberg
German manufacturing output was unchanged in July from the previous month, today’s report showed.
German manufacturing output was unchanged in July from the previous month, today’s report showed. Photographer: Michele Tantussi/Bloomberg
German exports fell and industrial production rose less than economists forecast in July, suggesting the recovery in Europe’s largest economy is losing momentum.
Sales abroad dropped 1.5 percent from the previous month, while production increased 0.1 percent, reports from the Federal Statistics Office in Wiesbaden and the Economy Ministry in Berlin showed today. Separate reports showed that industrial production declined in the Netherlands in July, while annual production output in Spain rose the least in five months.
The German economy may be cooling after expanding at the fastest pace in two decades in the second quarter. Retail sales unexpectedly fell for a second month in July and manufacturing growth eased in August, data this month showed. Still, business confidence rose to a three-year high and Daimler AG, the world’s second-biggest manufacturer of luxury cars, said last week that Mercedes-Benz sales jumped in August as Chinese demand soared.
“The economy is slowing, but it’s slowing from unsustainable levels of growth,” said Simon Junker, an economist at Commmerzbank AG in Frankfurt. “We had phenomenal numbers in the first half, so a bit of a backlash is not surprising. We’re still quite optimistic about German growth.”
‘Slower Pace’
Bonds stayed higher after the production report was published, with the yield on the 10-year German bund at 2.23 percent as of 11:43 a.m. in London, down 3 basis points since yesterday. The euro was up 0.2 percent to $1.2710.
Economists predicted that German industrial production rose 1 percent in July, according to the median of 40 estimates in a Bloomberg News survey. They forecast that exports would be unchanged on the month, a separate survey showed.
From a year earlier, production increased 10.9 percent when adjusted for the number of work days.
Manufacturing output was unchanged in July from the previous month, today’s report showed. Output of investment goods declined 0.7 percent in the month and production of basic goods rose 0.4 percent. Construction output increased 0.9 percent.
“It was to be expected that the pace of industrial production growth would weaken” after a strong first half, the ministry said in the statement. “The industrial recovery will continue, albeit at a slower pace.”
German plant and machinery orders jumped 48 percent in July from a year earlier, the Frankfurt-based VDMA machine makers’ association said on Sept. 1. Export orders surged 54 percent.
‘Signs of Cooling’
Still, the economy may struggle to gather strength as the global recovery weakens and European governments cut spending to push down budget deficits that soared during the recession.
While order books remain full for now, “there are signs of cooling,” the head of Germany’s BGA wholesalers and exporters group Anton Boerner said yesterday. “We’re watching the fourth quarter carefully because there are economic uncertainties,” he said, citing concern about a renewed U.S. recession.
“Nobody expects the economy to power ahead at the same pace as in the first half of the year,” said Carsten Brzeski, an economist at ING Group in Brussels. “At the same time, the order books are still full and China is not all of a sudden going to stop ordering machines.”
To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net
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