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Economy in Brief

German IP Springs Back to Life
by Robert Brusca  July 7, 2011

German IP sprang back to life in May jumping by 1.2% and more than making up for its drop of 0.8% in April. Still IP growth is slowing it has slipped from 7.5% over 12-months and from even stronger six months result to 6.3% annualized over the recent three-months.

In the chart we can see that all the major IP categories are on sliding profiles except for consumer goods. While the consumer goods sector is still the weakest of the three main sectors, it is still showing the steadiest Yr/Yr growth. The table shows that for capital goods its sequential growth rates for growth from 12-months and in have been quite stable although at a pace that is a slower rate of growth for that sector than in the past.

It may well be that the German economy has been through some gear shifting and now is stabilizing. It may be that the consumer sector has finally risen in prominence and will help to support growth better in the months ahead. Right now that story is consistent with the facts.

But lurking in the background the ECB has just raised rates for the second time in this expansion. We know that the German people are unhappy about the bailing out of Greece and how the various debt negotiations are going in the Euro-Area. These concerns may not dampen their own spirits when it comes to spending. But as we have seen, orders from overseas are slowing and while overall factory orders are growing stronger than factory output in Germany there are still a lot of questions for Germany about the future.

Total German IP
SAAR Except M/M May-11 Apr-11 Mar-11 3Mo 6Mo 12Mo Qtr-2-Date
IP total 1.2% -0.8% 1.2% 6.3% 9.5% 7.5% 5.5%
 Consumer 0.0% 0.3% 1.4% 7.1% 7.6% 4.8% 7.9%
 Capital 2.5% -1.1% 1.7% 12.6% 12.0% 12.2% 10.2%
 Intermed 0.7% 0.3% 0.3% 5.7% 11.5% 7.5% 6.7%
Construction 1.1% -5.0% 5.5% 5.7% 15.5% 8.8% 0.4%
MFG IP 1.3% -0.3% 1.1% 8.8% 11.2% 8.9% 8.5%
Real MFG Orders 1.8% 2.9% 0.0 7.9% 6.6% 12.2% 12.8%
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