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Economy in Brief

German IP Shows Split Trends
by Robert Brusca  February 8, 2011

Not surprisingly German orders and IP show similar characteristics. In the orders report capital goods are strong and consumption orders are weak. For the IP it is the same relative configuration, but with even weaker trends for intermediate goods.

German IP has slowed sharply. Its Yr/Yr growth is now at 10% capital goods output is still raging strong at 20%. And capital goods output is accelerating. But overall output is losing steamed as growth has gone from 9.9% over 12-months to 3.5% over six months to 2.7% over three months. Consumer goods output is declining at an accelerating pace and intermediate goods output is too. Capital goods strength is not enough to keep overall IP accelerating.

Despite the clear erosion in output, orders have had a revival after a period of slowing. So it is not certain that there is any trend in German output that we need to be worried about. The orders series is expected to be more of a leading indicator and its revival in December may signal that he drop off in the pace of output is temporary.

Total German IP
SAAR Except M/M Dec-10 Nov-10 Oct-10 3Mo 6Mo 12Mo Quarter-
2-Date
IP total -1.5% -0.6% 2.8% 2.7% 3.5% 9.9% 7.7%
 Consumer -1.3% -0.8% 0.3% -6.8% -1.2% 0.4% -2.1%
 Capital 3.3% -0.5% 4.6% 33.5% 20.5% 20.8% 26.9%
 Intermed -3.1% -0.4% 1.9% -6.4% -2.2% 11.3% 0.6%
Memo
Construction -24.1% -1.5% 3.1% -64.8% -40.0% -18.2% -23.0%
MFG IP -0.1% -0.5% 2.7% 8.5% 7.0% 13.1% 10.3%
MFG Orders -3.4% 5.2% 0.0 14.6% 2.8% 19.5% 11.2%
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