Germany: Mild rebound of industrial production in June - ING

Carsten Brzeski, Chief Economist at ING, suggests that the German industrial production did not show any pre-Brexit weakness, increasing by 0.8% MoM in June, from -0.9% MoM in May.

Key Quotes

“The increase, however, comes too late to make a disappointing quarter for the German industry a good one.

On the year, industrial production was up by 0.5%, from -0.3% in May. Looking at the details, production of capital goods and consumer goods were the main drivers of the June pick-up. After the strong first quarter, the construction sector continued its recent downward correction, dropping by 0.5% MoM; the fourth consecutive decrease of activity in the construction sector. Interestingly, the correction in the construction sector is somewhat counterintuitive to anecdotal evidence of an ever-booming real estate sector in Germany. Taken at face value, however, construction should have been a severe drag on GDP growth in the second quarter.

The British referendum came too late in June to really have an impact on German industrial production. However, increased uncertainty about the future of Europe and the Eurozone in the wake of the Brexit vote should in our view leave some marks on German industrial activity over the coming months. With stagnating industrial activity, thinner order books and dropping inventories, chances remain low that the former backbone of the German economy will quickly return to its old strength.

All in all, today’s industrial production data take away some fears of a hard landing of the German economy in the second quarter (GDP data to be released on Friday). The negative impact from industrial production and the construction sector should, in our opinion, be more than offset by strong private consumption.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.