Strong German industry output, exports point to Q4 rebound

Big 5

German exports jumped more than expected in November, posting their steepest monthly rise in four-and-half years and pushing up overall industrial production which drove growth in Europe’s biggest economy in the final quarter.

The data, released by the Federal Statistics Office and the Economy Ministry on Monday, reaffirmed expectations for a strong rebound in the fourth quarter of 2016 after the economy halved its quarterly growth pace in the third due to weaker exports.

“The New Year started with some mildly good news,” ING economist Carsten Brzeski said, adding that the latest batch of figures brought evidence that the economy gained momentum in the final quarter of the year.

Industrial production rose for the second consecutive month in November, edging up 0.4 percent on the month, the Economy Ministry said. This was slightly weaker than the consensus forecast in a Reuters poll for a rise of 0.6 percent.

The increase was driven by a 1.5 percent jump in construction output, the strongest monthly gain since February. Manufacturing production was up 0.4 percent while energy output fell 0.4 percent.

The October reading was revised up to a rise of 0.5 percent from a previously reported rise of 0.3 percent.

“Production in manufacturing and construction clearly picked up after the weak summer semester,” the Economy Ministry said.

“Both orders intake in manufacturing and construction orders as well as the sentiment indicators in these sectors are pointing to a solid output growth in the winter semester,” it added.

Industrial orders data released on Friday had already pointed to a busy final quarter for factories with the government expecting the upswing to carry into 2017.


Separate data released from the Federal Statistics Office showed on Monday that seasonally adjusted exports rose by 3.9 percent on the month.

This was the strongest monthly gain since May 2012 and was better than the consensus forecast in a Reuters poll for a rise of 0.5 percent.

“The weak euro helps German exporters,” Helaba analyst Stefan Muetze said.

Imports increased by 3.5 percent which was the strongest monthly rise since June 2014 and also much stronger than a predicted increase of only 0.2 percent.

The seasonally adjusted trade surplus widened to 21.7 billion euros ($22.86 billion) from 20.6 billion euros in October. The November reading was above the Reuters consensus forecast of 21.2 billion euros.

A breakdown of non-adjusted trade data showed exports to countries outside the European Union jumped by 7.6 percent while demand from euro zone members rose by 5.2 percent in November.

“Today’s industrial data have in our view prepared the grounds for a re-acceleration of GDP growth in the final quarter and a strong number for 2016 growth,” Brzeski said.

Economists expect the German economy to have more than doubled its quarterly growth pace to some 0.5 percent in the fourth quarter.

For 2016 as a whole, the government predicts higher private consumption and state spending to have propelled growth to 1.8 percent, which would be the strongest in five years.

The Federal Statistics Office will publish preliminary GDP growth data for 2016 on Thursday.

Source: Reuters