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Economy in Brief

German Output Advances
by Robert Brusca  February 6, 2015

German industrial production keeps dialing up positive growth rates even if they are small gains. The sequential growth rates from one-year and in show overall output accelerating, moving up from -0.4% of 12 months to an annualized pace of 3% over the most recent three months.

However, the picture of annual rates of growth by sector still reveals a lot of lethargy. Indeed, even the `acceleration' to a 3% pace over the recent three months is a hardly strong growth.

There is strong output growth in the German consumer goods sector where IP is advancing at a 12.5% annual rate over three months. This contrasts to the usual backbone of German industry, capital goods, where output trends are decelerating and output is shrinking at a 2.7% pace over three months.

The German construction sector is advancing and accelerating at a 5.2% annual rate over three months. Construction output is up for two months running.

For all of manufacturing, output is also accelerating and advancing at a 5.2% annual rate over three months. Moreover, real manufacturing orders that tend to precede trends in manufacturing show stronger acceleration in train, rising at a 19.4% clip over three months after posting a 12.6% annual rate over six months.

Early EMU reporters are few and far between. Ireland that has been strong but also mercurial was off by 12.4% in December following simple monthly gains of 4.6% in November and 7.5% in October. Spain posted a surprise drop of 1.5% in December. Portugal's IP also dropped. All three show net negative IP growth rates over three months, but only Portugal is also falling on balance over 12 months.

The recently completed quarter finds German output rising at a 1.9% pace with manufacturing up at a 2.2% pace and construction output up at a 4.6% pace. In the quarter, manufacturing orders are up at a 7.7% pace.

Events in the EMU still have debt negotiations with Greece in flux and region is set to meet and talk about Greece on February 11. Meanwhile, a peace initiative is being promoted by Hollande and Merkel for Ukraine. There is for now a ceasefire in place as they shop the pan to Putin.

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