Exports give German GDP growth hope

City A.M. Reporter
German exports soared in September while industrial output faltered, indicating Europe’s largest economy will post solid if unspectacular third quarter growth later this week as the recovery eases.

Exports grew twice as fast as expected in September, up 3.0 per cent on the month when seasonally adjusted, and the trade surplus reached its widest in nearly two years at €15.6bn, data from the Federal Statistics Office showed yesterday.

“Demand side data for the quarter suggests we have a broad-based continuation of the upswing,” said UniCredit’s Alexander Koch. “Of course, we are seeing quite a deceleration compared to the previous quarter, but with expectations for quarterly third quarter growth of around 0.75 per cent, this is still a rather respectable growth rate for the German economy.”

GDP data is due on 12 November. The median estimate in a Reuters poll of 40 economists is for growth of 0.70 per cent. By contrast, the German economy expanded at 2.2 per cent quarter-on-quarter in the second quarter of the year, its fastest rate in reunified Germany.

The strength of the euro and a stuttering outlook for some of its global trading partners are likely to weigh on demand for German manufacturing goods, and data already points to a slowdown in the industrial sector that has powered the recovery.

Output fell by 0.8 per cent on the month in seasonally adjusted terms, the Economy Ministry said, missing the median forecast for a 0.5-per cent increase in a Reuters poll and sending the euro to the day’s low against the dollar.

The decline was the greatest since October 2009. Yet analysts said the fall in industrial output was unlikely to change their third quarter GDP estimates given the strong export data and solid long-term averages for output data.

Output rose 1.2 per cent on a rolling two-month basis.