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German IP disappoints in November - ING

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 8, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) – Carsten Brzeski, Research Analyst at ING, notes that this morning’s trade and production data end an almost all-German week in the Eurozone, in which macro-economic data have almost been overshadowed by the mass assaults in several bigger German cities on New Year’s Eve.

    Key Quotes

    “German industrial production dropped in November by 0.3% MoM, adding to evidence that the Chinese and emerging market slowdowns are leaving their marks on the Eurozone’s largest economy. Moreover, these weak data add to concerns that hard data will not be able to catch up with optimistic sentiment indicators.

    On the year, industrial production remained unchanged. Looking at the details, bright spots were in the production of intermediate (+1.1% MoM) and consumer goods (+1.9% MoM). The construction sector benefitted from the mild weather in November and increased by 1.6% MoM. At the same time, exports increased by 0.4% MoM in November, while imports increased by 1.6% MoM. As a consequence, the trade balance narrowed to 20.6bn euro, from 22.5bn euro in October.

    It is not easy to find a common theme for latest German data. While consumption remains solid, on the back of the strong labour market, low inflation and low interest rates, latest developments are still far from creating exuberance. At the same time, industrial production is treading water and the current slowdown is clearly more than only the result of a vacation-driven summer lull.

    Looking ahead, ongoing uncertainties in China, a possible slowdown in the US economy and more generally the negative effects from record-low oil prices a quick rebound in industrial production is anything but certain. To the contrary, in our view, industrial activity should continue to remain sluggish this year.

    Next week, the German statistical office will continue its long tradition of releasing GDP data for the entire year without having any hard macro data for December. The latest batch of November data suggests a continuation of the recovery in the fourth quarter, albeit at a rather subdued pace. However, in the light of the latest market turmoil, continued concerns about the Chinese economy, extremely low oil prices and the absence of dynamic growth regions in the world economy, any shouts of joy about strong German growth should better remain humble.”
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