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Economy in Brief

German IP Shows Some Bounce 
by Robert Brusca October 8, 2008

German New Orders and retail sales rose unexpectedly in August. So the August rise in IP of 3.4% is less of a surprise than it otherwise would be. There is a growing consensus that the timing of holidays has had a lot to do with the false strength being recorded in August. It is hard to find anyone who wants to take these signs of strength to heart.

Still IP trends do not yet look as weak as the dwindling (pre-August) trends in orders and in retailing (see the current orders trends in the table above). At 1.7% 12-month IP growth is firm. Over six months IP is off by 0.6%. But over three months it is up at a whopping 7.7% pace. Still, quarter-to-date IP is off at a 2.2% annual rate.

The patterns in IP also mark most of the major categories. A minor exception is for quarter-to-date growth. There, the negative growth in the quarter is all due to severe weakness in capital goods output. Consumer goods and intermediate goods output each still are advancing in the quarter but at a near crawl, a 0.5% annual rate for both.

Total German IP
Saar except m/m Aug-08 Jul-08 Jun-08 3-mo 6-mo 12-mo Quarter-to-Date
IP total 3.4% -1.6% 0.2% 7.7% -0.5% 1.7% -2.2%
Consumer Goods 3.0% -1.6% 0.5% 7.7% -1.2% -2.3% 0.5%
Capital Goods 3.9% -3.1% 1.7% 9.7% -1.0% 3.4% -6.4%
Intermediary Goods 2.6% -0.6% -0.5% 6.4% 1.6% 2.6% 0.4%
Memo              
Construction 5.5% -2.6% -2.4% 1.0% -19.2% 0.5% -3.8%
MFG IP 3.2% -1.8% 0.6% 8.0% 0.0% 2.0% -2.4%
MFG Orders 3.6% -1.3% -2.6% -1.2% -7.3% -1.3% -7.7%
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