· German IP edged lower in October in the face of a spurt in orders for the month that was dominated by bulk orders. Still with the -0.3% October result German IP is entering the new quarter on an up note. Q/Q calculations are concerned with comparing the average level of IP in the current quarter to the average level in the previous quarter. The spurt for IP in August and small the rise in September still leave the level of IP in October, after its fall, above the Q3 average. IP is growing at annual rate of 2.6% entering Q4. Consumer goods output is much weaker, up at just a 0.4% pace in Q4. As has been the case capital goods output is up a strong 14.3% at an annual rate. Intermediate output is off at a 2.2% pace. Ex construction, IP is rising at nearly a nine percent annual rate. 

· So Germany continues to be a bit of a conundrum. The trends in the chart show that no direction is really dominant. The sectors are moving in different directions, too. We know the strong euro is creating problems; we are unsure how many. Germany remain a bit of an enigma. 

Total German IP

Saar exept m/m

Oct-07

Sep-07

Aug-07

3-mo

6-mo

12-mo

IP total

-0.3%

0.1%

1.9%

7.1%

7.5%

5.9%

Consumer goods

-1.3%

0.1%

4.2%

12.0%

0.4%

3.0%

Capital goods

2.1%

-0.5%

1.6%

13.4%

13.4%

10.4%

Intermediary goods

-1.0%

0.2%

1.5%

2.9%

6.9%

5.6%

Memo

Construction

0.2%

0.7%

2.0%

12.6%

4.3%

-0.8%