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German 2019 Growth Weakest In 6 Years

germanyindustrialproduction oct08 15jan20 lt

Germany's economy expanded for a tenth year in a row, but at the slowest pace in six years in 2019, preliminary figures from the statistical office Destatis showed on Wednesday.

Gross domestic product grew a price-adjusted 0.6 percent from the previous year, when it rose 1.5 percent. Economists had forecast 0.60 percent growth.

This is the longest growth phase in unified Germany, Destatis said. However, the latest growth was smaller than its 10-year average of 1.3 percent.

The latest pace of growth was the slowest since 2013, when the economy expanded 0.4 percent.

Growth continued to be driven by private consumption, which grew 1.6 percent. Government expenditure increased 2.5 percent.

Gross fixed capital formation rose sharply by 3.8 percent, led by increased investments in civil engineering and residential construction.

However, investment in equipment, mainly including investments in machinery and vehicles - rose just 0.4 percent.

Including changes in inventories, gross investments decreased 1.7 percent.

"The noticeable reduction in inventories is, among other things, the result of weak industrial production and increased exports," Destatis said.

Export growth slowed to 0.9 percent from 2.1 percent in the previous year. Imports grew 1.9 percent after a 3.6 percent rise.

The value added in manufacturing industry shrunk 3.6 percent after a 1.5 percent expansion in 2018.

Elsewhere on Wednesday, the German economy ministry said in its monthly report that the weak phase in industry has not yet been overcome, while the boom in the construction industry continues.

That said, the stabilizing tendencies in incoming orders and declining pessimism in business expectations are positive signals, the ministry added.

Destatis data also showed that employment grew by around 400,000 people from 2018 to 45.3 million. The increase was mainly due to a rise in employment subject to social security contributions.

In 2019, the general government account logged a surplus for the eighth time in a row. The budget surplus, however, fell to EUR 49.8 billion or 1.5 percent of GDP from EUR 62.4 billion in 2018.

The statistical office is set to publish the GDP figures for the fourth quarter of 2019 on February 14.

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