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Economy in Brief

German IP Decline Slaps On The Brakes...
by Robert Brusca  May 8, 2012

German IP jumped by 2.8% month-to-month in March rebounding from a small decline of 0.3% in February. As result of this strength IP is now up at a 15.8% annual rate over three months and is up by 0.2% in the first quarter over Q4.

In an unusual twist German consumer goods output led the rebound rising by 3% m/m compared to 2% for capital goods and 0.3% for intermediate goods.

The German construction sector is rebounding sharply too in March up at a 30.7% annual rate month-to-month. Still construction is lower in its Q/Q framework falling at a 6.2% annual rate.

Manufacturing IP was up strongly but at a much lesser pace than the headline at 1.4%. MFG also has an accelerating 3-month rate of growth and is showing a solid rise in the quarter-over-quarter framework at 0.9%. Earlier we saw that German orders were up strongly in March.

Europe overall is still in the grip of concerns about Greece. The lead party has failed to form a government so now the opportunity to form a government will be handed down the line. No one is very optimistic. In Russia there are street protests after Putin took his oath of office. In Italy overnight regional elections have showed a shift to the left there.

The political situation is still unstable and in the Zone the inability in Greece to form a government could push Greece into a default since it needs a government to approve the next round of austerity in order to get the next slug of funds from the bailout deal. Of course the Greek party now trying to set up a government, Syriza, is dedicated to cancelling the existing bailout accord and much more.

So, while Germany is showing some life the Euro-Area continues to show threats.

Total German IP
SAAR Except M/M Mar-12 Feb-12 Jan-12 3Mo 6Mo 12Mo Q-2-D
IP total 2.8% -0.3% 1.2% 15.8% 3.6% 1.5% 0.2%
Consumer 3.0% -1.7% -0.6% 2.8% -0.8% -2.1% -5.8%
Capital 2.0% 1.4% 1.9% 23.4% 7.7% 5.3% 6.0%
Intermed 0.3% -0.3% 0.7% 2.8% -2.9% -0.2% -2.3%
Construction 30.7% -16.9% 4.7% 67.6% 24.2% 5.5% -6.2%
MFG IP 1.4% 0.3% 1.1% 11.5% 2.1% 1.8% 0.9%
Real MFG Orders 2.2% 0.6% 0.0 5.6% 4.1% -1.2% -2.9%
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