Good news for German exporters

GERMAN industrial production rose at a slower rate in April but managed to build on March’s bumper 4.3 per cent monthly increase, boosting optimism among analysts about the outlook for the German economy in spite of the ongoing sovereign debt crisis and the latest austerity cuts.

The increase in industrial production was driven by intermediate goods, energy and, once again, by the construction sector. As expected, construction continued its catching up since the winter dip, increasing 2.6 per cent.

ING’s Carsten Brzeski said: “With filling order books, the weak euro, business expectations back at pre-crisis level and increasing recruitment plans, the near term future for the German economy looks bright.”

“Even yesterday’s austerity package should hardly have a lasting impact on economic growth. Of course, at some point, the ongoing sovereign debt crisis will very likely also take its toll on the German economy. But this is for later. For the time being, German industry is running ahead at full speed,” he added.

There was some mixed news, however, with the net trade figures for April. German exports fell by 5.9 per cent on the month but imports fell at a faster pace of 7.3 per cent, going some way to offset the 11.4 per cent surge in March. This meant that the seasonally-adjusted trade surplus widened slightly to €13.1bn (£10.84) from €13bn in March.

The expectation is that German exporters should continue to benefit in the future from the weak euro and the uptick in global demand. As a result, the government’s austerity package should have little impact on exports, which are dependent on overseas demand.