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Economy in Brief

German IP Still Dropping Sharply
by Robert Brusca June 9, 2009

German industrial production fell by a sharp 1.9% m/m in April. The April drop follows a small gain of 0.3% in March. The pace of decline in IP is slowing down in the recent three-month period as its negative growth rate (saar) is -18.1% compared to -32.3% over six months. The 3-mo pace represents a slower drop than for Yr/Yr output as well.

Capital goods output, the backbone of German industry, continues to be very weak. Although capital goods output rose by a strong 3.7% in March and that looked good at the time, the gain is now sandwiched between declines of 5.2% m/m in February and of 6.4% m/m in April. With the April figures in hand the March bounce looks like an anomaly. Still, the slide in capital goods output slowed its pace of decline in three months compared to six months returning to roughly to its Yr/Yr pace. Intermediate goods output is where most of the progress seems to be made. Consumer goods output is still decelerating.

German orders trends do not look as good as we had hoped. While German orders are showing some better signs, and although output itself rose in May, the declines are back in April and the sense of progress is largely absent from this report.

Total German IP
SAAR except m/m Apr-09 Mar-09 Feb-09 3-mo 6-mo 12-mo Quarter-to-Date
IP total -1.9% 0.3% -3.4% -18.1% -32.3% -21.6% -15.5%
Consumer Goods 0.5% -1.0% -3.7% -15.8% -11.6% -6.4% -8.4%
Capital Goods -6.4% 3.7% -5.2% -28.4% -44.1% -29.7% -30.3%
Intermediate Goods -1.0% -1.7% -1.3% -14.8% -38.1% -25.8% -14.4%
Memo
Construction 0.5% 6.0% 1.9% 39.1% 13.9% 6.6% 35.1%
MFG IP -2.9% 0.8% -3.5% -20.5% -36.8% -24.2% -19.4%
MFG Orders 0.0% 3.7% -3.1% 2.0% -34.7% -33.2% 8.6%
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