· Larger order drop points to even worse performance in Q3.


· Trends in German output are losing momentum across all sectors despite a small rebound in the current month. Consumer goods output has been weakening for some time but the softening in capital goods output is a relatively new phenomenon. 

· Output of consumer goods and capital goods rose in June after falling sporadically in earlier months intermediate goods output that feeds both sectors, is simply declining. The sequential growth rates in the table show that that the annual rate of decline is becoming progressively weaker in the more recent periods- indicating cumulating weakness across sectors.

· In the quarter-to-date (now a complete Q2, but not yet fully revised Q2), IP is dropping at a 6.4% pace led by a weak consumer sector (-9.7%) MFG output is dropping at a 6.1% pace. MFG orders are dropping at an even sharper 15.4% pace in the quarter, an ominous sign for Q3. 

Total German IP

Saar except m/m

Jun-08

May-08

Apr-08

3-mo

6-mo

12-mo

Quarter -to-Date

IP total

0.2%

-1.8%

-0.2%

-7.2%

-2.3%

1.6%

-6.4%

Consumer Goods

1.0%

-0.3%

-3.0%

-8.9%

-5.8%

-0.2%

-9.7%

Capital Goods

1.4%

-3.7%

2.7%

1.5%

2.1%

4.5%

-4.3%

Intermediary Goods

-0.6%

-1.0%

-1.9%

-12.9%

-4.5%

1.3%

-6.1%

Memo

Construction

-2.1%

2.4%

-3.5%

-12.3%

-6.4%

0.2%

-28.8%

MFG IP

0.5%

-1.9%

-0.3%

-6.9%

-2.2%

2.2%

-6.1%

MFG Orders

-2.9%

-1.4%

-1.7%

-21.7%

-14.6%

-8.4%

-15.4%