• Industrial output declined in August
  • Orders outside of the euro zone plummet

German growth slowed over the summer. The first statistics for August confirm this observation. Whereas foreign trade was surprisingly vigorous in Q2, bolstered by the dynamic momentum of US demand, exports declined 5.2% m/m in August. We are now seeing the effects of the deterioration in the global economic environment and the upturn in geopolitical risks. Germany’s main trading partners in the emerging markets, foremost of which are China and Russia, have experienced a net slowdown in recent months, while the eurozone recovery has been very gradual at best. Manufacturing output contracted 1.1% m/m. Assuming zero growth in September, manufacturing output would fall somewhat over the quarter, in keeping with the lack of an acceleration in Q3 GDP growth. Lastly, manufacturing orders indicate that this slowing trend will continue in September. Orders were down 1.8% in August, after a 2.2% decline in July, mainly due to the decline in orders outside of the eurozone (-3.7%, after -10.1% m/m). Surveys also point in this direction, confirming the observed trend. In September, the IFO current conditions index for the manufacturing sector reported the biggest decline in nearly a year.


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