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Economy in Brief

German IP Advances
by Robert Brusca March 8, 2010

The sharp German recovery in the Yr/Yr growth of industrial production is being led by an upsurge in intermediate goods output. Capital goods output is rising briskly as well. Consumer goods continue to make snail’s pace progress. Only intermediate goods output is rising Yr/Yr to any significant degree, but capital goods output now has broken that threshold as well. Still, on a different venue all this is turned upside down.

Although the Yr/Yr rise in IP seems to have strong acceleration across sectors this is NOT confirmed by the sequential growth rates that look at annualized rates of growth over telescoped periods. The table shows that the annualized growth rate over three months for overall IP is just 1.3%, down from 6.8% over six months and below the Yr/Yr rate of 2.1%.Capital goods and intermediate goods output have decelerated sharply over three months compared to six months. But consumer goods output surprisingly is in a sharp accelerating phase with growth at a 12% pace over three months compared to an 8% pace over six months and to -1.2% Yr/Yr.

In the brand new quarter consumer output is rising at an 8.8% annual rate along with intermediate goods where output is up at a strong 5% pace. Capital goods output is falling by 3.2% early in 2010-Q1. Of course the best news for the sector is that orders have stepped up their pace in January after a period of meandering weakness. So whatever hint of slowing or erratic movement we see in the industrial production report, the sector seems to be well underpinned by new orders so that IP growth should continue to be strong in the months to come.

Total German IP
Saar exept m/m Jan-10 Dec-09 Nov-09 3-mo 6-mo 12-mo Quarter
IP total 0.6% -1.0% 0.7% 1.3% 6.8% 2.1% 1.0%
 Consumer -0.1% 1.6% 1.3% 11.9% 8.2% -1.2% 8.8%
 Capital -1.0% 0.3% 0.7% 0.0% 8.1% 0.2% -3.2%
 Intermed 3.3% -4.1% 1.3% 1.2% 11.5% 7.9% 5.0%
Construction -14.3% -2.0% 0.6% -49.2% -28.2% -9.4% -63.1%
MFG IP 0.9% -1.2% 0.9% 2.5% 9.3% 3.6% 2.5%
MFG Orders 4.3% -1.6% 0.0 23.7% 14.2% 19.7% 27.5%
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