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Economy in Brief

The German Condition...
by Robert Brusca November 28, 2007

German wholesale sales growth is lagging in new quarter. Real ex-auto sales remain challenged.

Europe has been spinning out mixed economic signals. While there has been a lot of angst exhibited over the strong euro, the German finance minister has embraced the strength and ECB members say a strong currency is ‘the right sort of problem to have,’ better than the other one.

In the wake of this strength EMU economic reports have become uneven. While orders have showed weakness across countries, other reports have showed some resilience, notably the IFO survey in Germany and an INSEE morale survey for industry in France. The most recent German consumer sentiment reading from GFK shows a weaker December is in store. But there has been no full scale weakening.

German wholesalers fit not the mixed mode. Overall sales are withering in the new quarter down by 0.1% Q/Q for an annual rate drop of 0.7% and lower from the year ago three month period by 1.6% in real terms. Ex autos sales are still eroding. The German VAT tax hike has wreaked havoc with German retail/wholesale trends so far this year. Now with the euro soaring, a new challenge is in gear. The strong euro does not appear to have knocked the wind out of the German economy but it has been added to list of headwinds that the economy faces. Labor unrest and possibly more ECB rate hikes, especially in the wake of such strong ongoing money and loan growth in EMU, also are on that list. Despite it all German wholesale sales are only moderately weak.

One Month of Quarter Complete
Quarterly showing
  %Q/Q %-Saar %Q/Yr Ago
Nominal 1.1% 5.5% -19.8%
Real -0.1% -0.7% -1.6
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