German IP Shows Some Upside

German industrial production shows signs of stabilizing and reasserting growth in the January report. The chart of year-over-year growth rates shows that by sector the year-over-year trends have stopped falling and that capital goods in particular are showing a bounce to a higher rate of growth.

Inside one year the table shows sequential growth rates from 12 months to six months to three months all annualized are showing a near universal tendency to higher rates of growth. Over three months, all sector growth rates for consumer goods, capital goods and intermediate goods exceed 5.5%. Since IP data are inflation-adjusted, these all are substantial rates of expansion.

The German construction sector also is showing a substantial lift, posting a three-month annualized rate of growth at 12%.

Manufacturing growth has picked up to 6.4% at an annual rate over three months but real manufacturing orders are showing a tendency toward deceleration. Weak orders are the one fly in the ointment for Germany in this report.

In the quarter-to-date, German IP and its three main sectors are all sporting solid-to-strong rates of growth. Manufacturing has a 5.6% pace of growth in the quarter-to-date; that is countermanded by a 10.3% rate of decline in German real manufacturing orders.

Elsewhere among the early reporting EU/EMU members, we find a preponderance of quarter-to-date weakness. Only Sweden shows a gain in industrial production on a quarter-to-date basis. Over three months, Spain, Portugal and Norway each show IP declines with Sweden posting the lone increase. Still, this sample of countries is too small and disparate to have much meaning for all of Europe.