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German Industrial Production

Posted by Joseph Trevisani on Apr 8, 2013 12:16:00 PM

German industrial production expanded in February after declining in January and the fourth quarter. It was the second positive month out of the past six.

Production gained 0.5%, outstripping the median analyst prediction for a 0.3% increase, but the rise was more than offset by the negative revision to January now -0.6% instead of the initial 0.0%.  The annual rate rose to -1.8% in February from the adjusted -2.6% in the previous month, originally estimated at -1.3% but it was double the -0.9% forecast. Annual production rates have declined in ten of the past twelve months.

German purchasing managers' sentiment fell sharply in March in statistics released last month.  Manufacturing PMI fell to 49.0 from February's 50.3 which had been the first reading above the 50 division between expansion and contraction in a year.  Services PMI declined to 50.9 from 54.7, the lowest score since last November.

The Ifo survey found similar slippage in outlook. The assessment of the general business climate skidded to 106.7 in March from 107.4 in February, though it was still the second highest reading since last April. The measure for the current business environment dropped to 109.9 in March from 110.2. Though March rated higher than all three months in the fourth quarter, it is below the 115.9 average of the past two years. Expectations for business over the next six months fell to 103.6 from 105.00 in February which had been a 20 month high.

Manufacturing production rose 0.5% in February, energy output climbed 3.9% and construction fell 2.7%.

The Bundesbank, the German central bank predicts that the Germany economy, the EU and EMU's largest, will grow 0.4% this year and 1.9% in 2014.  This contrasts with the ECB forecasts for the eurozone as a whole -0.5% this year and 1.0% next.

Joseph Trevisani

Chief Market Strategist


Charts: Bloomberg

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