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Economy in Brief

German IP Continues Its Strong Rise
by Robert Brusca  April 7, 2011

Industrial output is advancing smartly in Germany across all three main sectors. The output of consumer goods is finally in gear, rising at a 2.3% annual rate. Intermediate goods output is up at a 16% annual rate. Capital goods the sector that has led the German rebound is now in a following role with output up at a withering pace, but quite strong at 7.9% over three months.

Both MFG IP and Orders continue to expand strongly. The ongoing rise in orders paves the way for output to continue to expand.

In the unfolding quarter Output is up at a 10.9% pace; MFG output is up at a 7.5% pace. Construction is rising at a super strong 77.9% annual rate. And, of course orders continue to push the envelope farther rising at an 18.4% pace.

If we compare the German trends for those of all of EMU, we make comparisons through January. Through January Euro-Area IP is up by 9.5% over 12-months while German output is up at a 14.5% pace. While German contributes strongly the Euro-Area rise output in France is up at a 7% pace and in Italy at a 5.6% pace. Even in Spain IP is expanding but just by 0.1% Yr/Yr. While Germany leads the Zone and boosts its performance the rest of the Zone is still growing solidly if not as strongly as Germany at least in manufacturing.

Against that background the ECB has begun to hike rates. The rate hike was first expected to be part of series of hikes but Trichet is now trying to distance the Bank from that view. In time we will see what markets come to believe. At a time that special circumstances are pushing up commodity prices, boosting headline inflation, with core inflation still rather well tempered and with financial crisis still spreading in Europe, it is strange time to be putting up rates in Europe. While the MFG sectors are generally strong only in Germany is the services sector relatively buoyant and consumer confidence too. In the rest of the Zone the consumer is struggling and so are the various services sectors.

Total German IP
SAAR Except M/M Feb-11 Jan-11 Dec-10 3Mo 6Mo 12Mo Qtr-2-Date
IP total 1.6% 2.0% -0.6% 12.4% 9.3% 14.7% 10.9%
 Consumer 1.4% 2.2% -0.6% 12.3% 4.7% 6.9% 10.9%
 Capital 1.6% -5.1% 5.6% 7.9% 12.3% 18.9% -4.5%
 Intermed 1.0% 5.9% -2.9% 16.1% 8.1% 15.2% 21.5%
Construction 3.4% 35.2% -24.2% 26.1% 14.9% 34.1% 77.9%
MFG IP 1.4% 0.3% 1.1% 11.5% 9.0% 15.3% 7.5%
MFG Orders 2.4% 3.1% 0.0 7.2% 11.4% 20.4% 18.4%
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