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Economy in Brief

July Industrial Production Expands in Germany & Hungary; Industry Remains Pillar of Growth
by Carol Stone September 9, 2006

We hear so much about the development of industry in various Asian nations that it's sometimes easy to think that industry elsewhere is shriveling up and fading away. This is hardly the case, as a quick look at new production data for Germany and Hungary can show.

Industrial production increased 1.2% in Germany in July, far more than forecast survey expectations that called for 0.5%. Analysts apparently expected June's 0.4% decline to be reversed, but not exceeded, as it was. The year-on-year growth also more than reversed its prior month's performance, surging to 4.7% from a drop of 1.2%. Since the present expansion began in mid-2003, German industrial production has grown at a 3.5% annual rate.

In Hungary, production increased 1.1% in July, a third consecutive gain after a minor dip in April. The year-on-year advance is 12.2%. Growth there since early 2004 has averaged 8.7%. These figures cover firms with five or more employees; the total dataset for July will be out September 15.

In both of these countries, the strength has come in more industrial products than in consumer goods. Germany reports details on the "market groupings" of its production, and during this latest 30-month recovery period, intermediate products have averaged 4.9% annualized growth, capital goods 5.5% and consumer goods 1.5%. July's industry performance over a year ago was above average for chemicals, rubber & plastics, metals, machinery, electrical equipment and transport equipment. A similar pattern obtained in Hungary in its full dataset through June, with the addition of the mining sector, leather goods and "not elsewhere classified", which includes furniture.

Thus, while consumer goods production, particularly nondurable goods, may have shifted to other geographic regions, "heavy industry" still appears to be firmly ensconced in Europe. In fact, in both Germany and Hungary, production of these industries is a major source of growth for the entire economy.

Industrial Production* July 2006 June 2006 May 2006 Year Ago 2005 2004 2003
Germany, 2000=100 109.5 108.2 108.6 104.6 104.1 101.7 98.0
  % Change 1.2 -0.4 1.5 4.7 2.4 3.7 0.1
Hungary, 2000=100 148.4 146.8 143.9 133.0 132.0 122.9 114.4
  % Change 1.1 2.0 1.6 12.2 7.4 7.5 6.6
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