German industrial production in August fell by 0.8% as consumer goods output increased by 1.8%, capital goods output increased by 1.2%, but intermediate goods output fell by 2.4% month-to-month. In July output had been flat with output declines of 2.2% for consumer goods, 0.1% for capital goods and 0.5% for intermediate goods.
Sequential growth rates for German output do not reveal a clear sequential trend, but the path clearly is weak. Over 12 months output is up by 2.5%; over six months it's falling at a 5.7% annual rate. However, over three months output is rising but only at a 0.4% annual rate – rise that breaks the declining trend but still a weak rise.
Sector trends sequentially Sequentially consumer goods output falls by 0.1% over 12 months, falls at a 7.7% annual rate over six months then gains at a 0.4% annual rate over three months. Capital goods output fares much better with a 10.4% gain over 12 months, a 2.4% annual rate increase over six months and with a strong acceleration of 14.1% annualized over three months. Intermediate goods output shows clear weakness. It is declining by 2.2% over 12 months, which deteriorates to a decline at an annual rate of 9.8% over six months and that decline barely improves to an 8.8% annualized decline over three months. Intermediate goods output clearly is holding back output trends while capital goods is a sector trying to push things into the growth column.
Construction trends in Germany show deterioration with the decline of 2.4% for output in August, a decline of 0.9% in July and flat performance in June. Construction sequential growth rates show clear deterioration with growth of only 1.1% over 12 months, declining at an 11.7% annual rate over six months then declining faster at a 12.5% annual rate over three months.
Manufacturing output, demand, and orders Output in manufacturing shows the same mixed trend as the headline but with a little bit more lift over three months; the growth rate of 3% compares to a growth rate of 3.6% over 12 months. However, real manufacturing orders that fell in August by 2.4% continue to show slippage with a decline of 4% over 12 months, a decline of 14.1% at an annual rate over six months and a decline that is trimmed to a 3.4% annual rate over three months. Real sales in manufacturing are a relative bright spot increasing in August by 1% and increasing in two of the last three months, generally. Sequentially, real manufacturing sales are up by 7.6% over 12 months, up by 0.4% at an annual rate over six months but then accelerate to a 9.7% growth rate over three months. Demand is holding up better than output and much better than orders – at least for now.
German industrial indicators are weak German industrial indicators show weakening trends. The ZEW current index registers a - 47.6 net diffusion reading in August compared to a -45.8 reading in July. The IFO manufacturing reading ticks higher in August to 90.4 from an index reading of 90.3 in July although both of those are below the 93.6 reading in June. Expectations for manufacturing from the IFO show a slight uptick in August compared to July with a reading of 83.5 but that's still significantly weaker than the 87.3 reading for June. The EU Commission industry net diffusion index for Germany falls to 7.5 in August from 10.9 in July and 14.9 in June. Looking at the sequential averages of 12 months to six-months to three-months, each one of these measures weakens over that profile. In addition, each one of these measures weakens on a quarter-to-date basis; as of August, that's with two months into the current quarter completed. The ZEW index shows a decline of 11 points in its net index readings QTD. IFO manufacturing shows a decline of 2.6 points; IFO manufacturing expectations are down by 2.9 points. The EU Commission industrial index is down by 6 points. All of these are on a quarter-to-date basis.
Other Europe trends- EMU members For in Europe, we have industrial output readings in manufacturing for EMU members France, Spain, Ireland, and Portugal and for European countries Sweden and Norway. The EMU members show increases in August for all four of them but that follows declines in July for all four of them. Over three months, among the EMU member countries, only Spain shows an output decline and a fairly hefty one at a 12.8% annual rate. However, sequential growth rates for industrial production from 12-months to six-months to three-months show a clear acceleration process for France. That is opposed by a clear deceleration process in Spain with mixed conditions displayed for Ireland and Portugal; both of which show output increase from 12-months to six-months and then slowing from six-months to three-months. Quarter-to-date, however, three of the four European Monetary Union members show declining industrial production. France shows the lone increase at a 3.6% annual rate, while Spain shows a decline at a 24.7% annual rate, Ireland shows a decline at a 16.3% annual rate, and Portugal shows that a small decline at a 0.5% annual rate.
Non-EMU Europe For the other European countries in the table, Sweden and Norway both showed declines in output in August but those follow increases in both June and July. Sweden shows a tendency for output to decline logging 2.1% annual growth rate over 12- and six-months compared to a larger 5% decline when annualized over three months. Norway shows acceleration as output declines by 0.9% over 12-months, increases at a 0.9% pace over six months then accelerates to a 2.4% annual rate over three months. On a quarter-to-date basis, output in Sweden, however, is stronger than in Norway despite the trends. Swedish output is rising at a 12.3% annual rate QTD, while Norwegian output is rising at just a 1.4% annual rate.
Global
