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Economy in Brief

German IP Jumps and Soars Early in Q2
German exports spurt and the Bundesbank cuts its outlook

by Robert Brusca  June 7, 2013

Capital goods output pushed German IP ahead, by rising by 4% in April and extending a streak of strong numbers. Overall German IP is up at a 15.1% pace over three-months (1.8% in April) and is on an acceleration tear (see table). BUT... the consumer sector is not taking part. German consumer goods output is shrinking at an accelerating pace: it is falling at a 3.9% pace over three-months, at a -1.8% pace over six-months and rising over 1.8% over 12-months. Intermediate goods are on a steady but slower accelerating trend line with growth crossing over into positive territory over three-months after declining over six months and 12-months.

Construction output in Germany is building a real had of steam surging by a simple 16.8% in April alone! Manufacturing also is on a steady path of acceleration.

In the quarter to date German output simply exploding. Overall output is up at an 18% annual rate in the quarter-to-date. Consumer goods output is actually expanding but as a very slow pace. Capital goods output is screaming higher at a 42% annualized gain in the new quarter! Construction output has escape velocity to launch into space at an annualized rate of growth of 97.9%. Manufacturing output is up at a 16.6% annual rate.

Other early reporters of IP data in EMU/EU show mixed results with IP up in Ireland and in Norway (EU) but off in Portugal. Ireland's and Norway's output also are making strong gains early in Q2 While Portugal is falling at a relatively rapid pace.

The ECB has recent cut its outlook for growth in EMU. Today The Bundesbank and the Austrian central cut their outlook with the Bundesbank citing European issues, not German issues. The Bundesbank warning came after release of this strong IP report and in the wake of a report that shows German exports continue to power ahead in this difficult global environment.

Even so the output will be dogged in the days ahead by European flooding. The pictures (if you have not seen them) are devastating. Come towns in German are seeing flood waters at heights unseen for over 500 years. The flood waters are coursing through central Europe. The Danube is now threatening Hungary.

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