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German growth slows less than expected in second quarter – business live

Discussion in 'Market News' started by Lily, Aug 12, 2016.

  1. Lily

    Lily Forum Member

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    Germany grew by 0.4% between April and June; IMF to release report on Chinese economy

    7.45am BST

    European stock markets are expected to open slightly down, but have had a good week, while bond yields have been falling to new record lows. Michael Hewson, chief market analyst at CMC Markets UK, has sent us his thoughts, as usual:

    This week’s break higher by the German DAX through the 10,500 level, along with new all-time highs for all three of the US main benchmarks does appear to have given European equity markets the extra impetus to kick on further yesterday.

    The move higher in the DAX while welcome, does appear to be an outlier, in terms of the rest of the core Eurozone markets, and despite outperforming the rest of Europe it still hasn’t been able to wipe out all of its losses year to date.

    7.43am BST

    Back to the German growth data. Higher exports and strong state spending and private consumption made up for weaker investment in construction and machinery.

    7.29am BST

    Good morning, and welcome to our rolling coverage of the financial markets, the world economy, the eurozone and business.

    There is a fair amount of economic data coming out today. The first estimate for German GDP for the second quarter is already out. It shows Europe’s biggest economy growing at 0.4%, twice as fast as expected. It’s a slowdown from the first quarter though, when Germany expanded 0.7%.

    #Germany beats: German econ grew 0.4% in Q2, double the speed expected. pic.twitter.com/V2JSHlO6VH

    We suspect that at least some of this hesitancy, and possibly some of the prior weakness too, was due to fears over a ‘leave’ vote in the referendum on 23 June. The forthcoming figures are for June, early estimates of which were published by the ONS at the time of last week’s GDP data. These suggested that the sector shrank by 1.0% over the month following a (revised) decline of 1.5% in May.

    Of course the main interest will be in the economic data for all sectors for July onwards, following the result of the referendum. In this respect anecdotal indicators are not encouraging with, for example, the construction PMI edging down to a new seven year low of 45.9 in July. This would tend to suggest that output in the sector declined at a faster pace than before the referendum, with a possibility that the economy as a whole has begun to contract as well.

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