German Industrial Output Dropped in July After June SurgeJeff Black
German industrial production fell more than expected in July after surging in June, adding to signs that growth in Europe’s biggest economy is moderating.
Output, adjusted for seasonal swings, fell 1.7 percent from June, when it jumped a revised 2 percent, the Economy Ministry in Berlin said today. Economists forecast a decline of 0.5 percent, according to the median of 41 estimates in a Bloomberg News survey. Production slid 2.2 percent from a year earlier when adjusted for working days.
Industrial production in June, while revised lower, still gained the most since March 2012 as Germany led the euro area out of its longest-ever recession. The country, which is in the final weeks of an election campaign, is expected to see the economy “normalize and stabilize” in the remainder of the year, the Bundesbank said on Aug. 19. Exports unexpectedly dropped in July, separate data showed today.
“There was a very strong rise in the previous month and it can’t continue at that tempo, even if overall the outlook is positive,” said Heinrich Bayer, an economist at Deutsche Postbank AG in Bonn. “Growth in the German economy is really rather stable.”
German manufacturing output fell 2.1 percent in July, with production of investment goods sliding 3.4 percent, today’s report showed. Construction rose 2.7 percent, while energy output declined 2.9 percent.
“The current decline in industrial production is not least the consequence of the strong result in the previous month,” the ministry said in a statement. “It seems that a moderate upward trend in manufacturing and a significantly stronger one in construction is continuing.”
Germany’s economy expanded 0.7 percent last quarter after stagnating in the three months through March amid a colder-than-usual winter. The euro-area economy, the country’s biggest trading partner, expanded 0.3 percent to snap six quarters of contraction.
While the 17-nation currency bloc is recovering, the European Central Bank yesterday maintained its forecast for an economic contraction this year. Gross domestic product will shrink 0.4 percent, compared with a June outlook of 0.6 percent. The ECB lowered its prediction for 2014 to a 1 percent expansion, from 1.1 percent.
German exports, adjusted for working days and seasonal changes, fell 1.1 percent in July from the prior month, the Federal Statistics Office in Wiesbaden said today. Economists predicted an increase of 0.7 percent in a Bloomberg News survey. Retail sales unexpectedly fell and factory orders declined more than forecast in the month, while unemployment rose in August, separate government figures show.
Schaeffler AG, the German family-owned bearing maker that’s the biggest investor in car-parts producer Continental AG, lowered its 2013 sales forecast on Aug. 28, citing weaker demand for industrial components.
Chancellor Angela Merkel, seeking a third term in Sept. 22 elections, called Germany “an engine of growth” in the only televised election debate between her and Social Democratic challenger Peer Steinbrueck on Sept. 1. Merkel’s Christian Union bloc is leading Steinbrueck’s SPD by 16 percentage points, according to the latest Emnid poll.
The nation’s capital investment rose 1.9 percent in the three months through June for the first expansion in three quarters, and private consumption increased 0.5 percent, a breakdown of gross domestic product data showed on Aug. 23.
The Organization for Economic Cooperation and Development this week raised its 2013 growth outlook for Germany to 0.7 percent from 0.4 percent predicted in May. The country’s jobless rate, at 6.8 percent, remains near a two-decade low.
“The fundamentals of the German economy are still looking good,” said Carsten Brzeski, senior economist at ING Groep NV in Brussels. “Industrial production is still the backbone of German growth. The last month was so extraordinarily strong, it was unlikely that production in July would meet that level.”