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German Industrial Production, Exports Growth Accelerates

germany jun07 07aug20 lt

Germany's industrial production and exports growth improved in June as the relaxation of the coronavirus containment measures both within the economy and abroad boosted demand at the start of the third quarter.

Industrial production advanced 8.9 percent month-on-month in June, faster than the 7.4 percent increase seen in May, data from Destatis revealed on Friday. Economists had forecast a monthly growth of 8.1 percent.

Similarly, exports advanced more-than-expected 14.9 percent on month, following May's 8.9 percent increase. Shipments were forecast to grow 13.3 percent in June.

A surge in exports and industrial production confirms the 'v'-shaped rebound, Carsten Brzeski, an ING economist, said.

With all the risks of a second lockdown wave, an increase of permanent unemployment and structural changes to the economy stemming from Covid-19, it is however very unlikely that this 'v' will last for long, the economist added.

The economy ministry said in view of the persistently weak demand, especially from abroad, the further catching-up process will likely take some time.

Andrew Kenningham, an economist at Capital Economics, said the recovery in industrial production should continue in the coming months, but will probably lose momentum. Output will remain well below normal for a long time yet, the economist added.

Due to the shutdown in April, manufacturing output decreased 16.1 percent sequentially in the second quarter.

Data showed that excluding energy and construction, industrial output was up by 11.1 percent in June.

Within industry, intermediate goods output showed an increase of 5.0 percent. At the same time, output of consumer goods grew 7.3 percent and that of capital goods advanced 18.3 percent.

Production in the automotive industry in June continued to increase markedly by 54.7 percent on month, data showed.

Outside industry, energy production grew 5.5 percent and construction output climbed 1.4 percent.

On a yearly basis, industrial production fell 11.7 percent in June after declining 19.5 percent in May.

The trade data showed that imports growth advanced to 7 percent from 3.6 percent in May. However, this was slower than economists' forecast of 10.9 percent rise.

The trade surplus rose to a seasonally adjusted EUR 14.5 billion from EUR 7.5 billion a month ago. This was well above the expected level of EUR 10.1 billion.

Year-on-year, exports decreased 9.4 percent in June versus a 29.8 percent decline in May. Likewise, the fall in imports eased to 10 percent from 21.7 percent.

In June, the current account surplus increased to EUR 22.4 billion from EUR 19.5 billion registered in the same period last year.

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