Germanys Economy Loses Steam: Dow Jones Germanys economic recovery lost steam in the third quarter, official data show Friday, but business surveys signal a pickup in economic activity toward the end of the year and broadening growth in 2014. The federal statistics office said Germanys gross domestic product--the broadest measure of goods and services produced across the economy--increased 0.3% in the third quarter from the preceding period, confirming its preliminary estimate. That translates into annualized growth of around 1.3%. It marks a significant slowdown from the second quarter, when GDP swelled 0.7% from the preceding period, or 2.9% at an annualized rate, buoyed by a rebound in construction and other production after a harsh winter. But the Europes largest economy outperformed the struggling euro zone in terms of growth and is expected to drive the regions muted recovery next year. By comparison, GDP in the 17-country euro bloc grew only 0.1% last quarter, or 0.4% at an annualized rate, according to a preliminary estimate from Eurostat, the European Unions official statistics agency. The chances are good that the economic upswing in Germany will gain a stronger foothold in the coming months, the Bundesbank said earlier this week. A survey of purchasing managers released Thursday confirmed this view. Germanys purchasing managers index rose 1.1 points in November to 54.3, a 10-month high and well above the 50 threshold signaling expansion. And a monthly survey of roughly 7,000 companies by Germanys Ifo institute, due to be released at 0900 GMT Friday, is expected to point in the same direction. Economists at BNP Paribas estimate that Germany will account for about half of total euro-zone growth next year. Third-quarter growth in Germany was solely driven by domestic demand, as both private consumption and public spending slightly increased from the second quarter, supported by low unemployment and rising wages. Although this is unlikely to silence critics of the countrys export-led growth model, it signals that the much-demanded rebalancing of the economy--towards stronger domestic demand--is already happening, albeit gradually, economists said. A timid recovery in German investment, which started in the second quarter, also continued, as construction spending jumped 2.4% in the third quarter from the preceding period. Investment in machinery and equipment increased 0.5% over the same period, as companies finally employed healthy cash positions or took advantage of favorable financing conditions. But the scope of future investment is expected to be limited, and focused on postponed maintenance and repairs rather than new production capacity, according to BNP Paribas Global Outlook published Wednesday. This also backs up the findings of a recent Wall Street Journal survey of investment intentions of German blue-chip corporations. Net exports were a drag on third-quarter GDP growth, shaving 0.4 percentage point off the quarterly growth rate, as exports rose 0.1% on the quarter, while imports increased 0.8%. The quarterly data are seasonally adjusted and take account of calendar effects.
Posted on: Fri, 22 Nov 2013 09:00:00 +0000
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