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Economy in Brief

German IP Growth Is Slight Downturn
by Robert Brusca  May 6, 2011

For most German sectors year-over-year growth in industrial output (or IP) has turned only slightly lower. Yet, over three months IP has accelerated overall led by consumer goods, a sector that has been late to the party. Capital goods, the leading sector thus far in the recovery, have seen output decline over three months despite increases in output in each of the last two months. Intermediate goods output is exceptionally strong advancing at an annual rate pace of 33.7% over three-months led mostly by a surge in January and followed by somewhat withering gains in the next two months.

Because of these patterns it is difficult to discern how strong German IP may still be. Capital goods seem weaker and we have seen that in sales for capital goods and we know that MFG orders have weakened especially from abroad. But capital goods production is back up in the last two months Even so it has not dug itself out of the hole created by the huge January drop. We are left wondering what is the real condition for German capital goods output? It is weak or recovering? Was January’s drop a fluke?

Germany’s consumer sector appears to be getting in gear late. German consumer goods output is up at a strong 16.8% annual rate pace over three months; it has expanded strongly over the past three months rather consistently. This sector seems to have found its legs.

Intermediate goods output jumped very sharply in January but that surge has faded. The recent month’s rise of 0.3% is meager.

On balance Germany’s output trends are mixed and are somewhat confusing. Coupled with some weakness in orders we should be guarded in our outlook for the future, especially if the euro stays strong or moves higher.

Total German IP
SAAR Except M/M Mar-11 Feb-11 Jan-11 3Mo 6Mo 12Mo Q-2-D
IP total 0.7% 1.7% 1.5% 17.0% 12.5% 10.9% 10.8%
 Consumer 0.8% 1.1% 2.1% 16.8% 5.7% 4.3% 8.5%
 Capital 0.8% 2.5% -5.2% -7.7% 15.9% 15.1% 0.2%
 Intermed 0.3% 1.3% 5.8% 33.7% 12.7% 12.1% 19.9%
Construction 6.2% 3.4% 35.2% 385.7% 30.5% 14.3% 79.5%
MFG IP 0.5% 1.8% 0.3% 11.0% 12.4% 11.9% 9.2%
MFG Orders -4.0% 1.9% 0.0 3.7% 9.0% 9.8% 9.6%
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