German Industrial Production Rises Less Than ForecastStefan Riecher
German industrial production increased less than economists predicted in November as the euro area’s recession left its mark on Europe’s largest economy.
Production rose 0.2 percent from October, when it fell a revised 2 percent, the Economy Ministry in Berlin said today. That’s the first increase in four months. Economists had forecast a gain of 1 percent, according to the median of 23 estimates in a Bloomberg News survey. From a year earlier, production fell 2.9 percent when adjusted for working days.
The Bundesbank predicts the German economy will stagnate in the first quarter after a marked contraction at the end of last year. Still, signs are increasing that the economy may recover soon. Sentiment among German entrepreneurs and investors climbed more than economists expected in December and economic confidence in the euro area, the country’s biggest export market, jumped to the highest level since July.
“The German economy probably experienced the worst growth performance in the fourth quarter since the first quarter of 2009,” said Carsten Brzeski, senior economist at ING Group in Brussels. “Looking ahead, however, strengthening external demand and sound domestic fundamentals should lead the way out of contractionary territory in the first half of this year.”
Manufacturing output rose 0.4 percent on the month in November, with investment-goods production up 1.4 percent and basic-goods output up 0.2 percent, today’s report showed. Production of consumer goods declined 2.2 percent and energy output dropped 3.3 percent. Construction gained 1 percent from October.
The euro was little changed after the report and traded at $1.3069 at 12:07 p.m. in Frankfurt. The Stoxx Europe 600 Index rose 0.2 percent to 286.8 and the benchmark DAX index increased to 7697.96.
In the U.K., the trade deficit remained stable in November as exports rose. The goods trade gap was at 9.16 billion pounds ($14.7 billion) compared with 9.49 billion pounds in October, the Office for National Statistics said today in London.
In Germany, “industrial production has stabilized” after “the weak start into the final quarter of 2012,” the ministry said in an e-mailed statement. While fourth-quarter output will remain below third-quarter levels, “the development of orders and the slight improvement of sentiment indicators speak for a somewhat more favorable production outlook in the new year.”
Bayerische Motoren Werke AG, the world’s biggest maker of luxury cars, said on Dec. 7 it targets higher sales and profit in 2013, boosted by growth in the U.S. and China.
Germany’s VCI chemical association, which represents 1,650 companies including BASF SE and Lanxess AG, on Dec. 12 forecast an increase in chemical and pharmaceutical production of 1.5 percent for this year, boosted by demand from emerging markets.
The Bank of Thailand kept its benchmark interest rate unchanged at 2.75 percent today on signs of an improving outlook for exports and strengthening domestic demand.
Canada may say housing starts were little changed in December, while the U.S.’s Mortgage Bankers Association will report loan applications for the week ended Jan. 4, after the index fell for the previous three periods.
The euro area succumbed to recession in the third quarter and the economy probably contracted another 0.3 percent in the final three months of the year, according to the median of 22 forecasts in a Bloomberg News survey. Unemployment in the 17-nation currency bloc rose to a record 11.8 percent in November, the European Union’s statistics office said yesterday.
The Bundesbank cut its 2013 growth forecast for Germany to 0.4 percent from 1.6 percent last month. Exports and factory orders dropped more than forecast in November amid weak foreign demand, reports showed yesterday.
Siemens AG said on Dec. 19 it is eliminating 1,100 jobs at two energy units in Germany, preparing for years of subdued demand for gas-fired turbines made at its Berlin plant as competition increases and utilities hesitate to invest.
The economic environment will be more difficult this year than in 2012, German Chancellor Angela Merkel said on Dec. 31. Europe’s sovereign debt crisis is “far from over,” though progress has been made and the “reforms that we’ve agreed on are starting to take effect.”
There’s “hope that the German economy will expand again at the start of 2013 after a sharp tumble in the fourth quarter of 2012,” said Ulrike Rondorf, an economist at Commerzbank AG in Frankfurt. “The order figures in past months and the business climate suggest that demand in the German industry is stabilizing.”