German Industrial Production Recovers On Automobiles; Exports Disappoint

(RTTNews) - Germany's industrial output rebounded in June on automobile production, while exports posted a sharper-than-expected decrease amid a moderate rise in imports, pushing the trade surplus down, official data revealed Wednesday.

Industrial output grew 1.4 percent on month in June, partially offsetting the revised 3.1 percent rise in May, Destatis reported. Production was expected to climb 1.0 percent.

The growth was largely driven by the 7.5 percent increase in the automobile industry after the sector posted a sharp 9.9 percent fall in May. An increase of 5.2 percent in the manufacture of electrical equipment also had a positive effect. On the other hand, the food industry contracted 5.3 percent.

Production of capital goods grew 2.5 percent and that of intermediate goods climbed 2.1 percent. Meanwhile, consumer goods output fell 2.4 percent.

Excluding energy and construction, industrial production advanced 1.5 percent. Energy output gained 2.9 percent, while construction output grew only 0.3 percent.

On a yearly basis, industrial production logged a 4.1 percent drop, slower than May's 7.2 percent decrease.

Another report from Destatis showed that exports decreased by more-than-expected 3.4 percent month-on-month in June after easing 3.1 percent in May. This was the second consecutive decrease. Exports were forecast to fall 1.5 percent.

Meanwhile, imports gained 0.3 percent, in contrast to the 5.5 percent decline in May. Economists had forecast imports to advance 2.8 percent.

Consequently, the trade surplus declined to EUR 20.4 billion from EUR 25.3 billion in the prior month. The surplus was also below forecast of EUR 23.5 billion. On a yearly basis, the decline in exports deepened to 8.3 percent from 3.3 percent. Imports fell 9.3 percent, but slower than the 10.3 percent decrease in May.

Falling exports point to ongoing structural weaknesses, while the increase in industrial production keeps hopes alive of at least a meagre industrial rebound in the second half of the year, ING economist Carsten Brzeski said.

The economist observed that with both the US and the Chinese economies losing momentum, along with new trade tensions, there is very little hope for a strong export-driven recovery.

Data released on Tuesday showed that industrial orders rebounded 3.9 percent in June due to the significant improvement in the auto industry.

The largest euro area economy had contracted 0.1 percent in the second quarter, reversing the first quarter's 0.2 percent expansion.

The International Monetary Fund projected the German economy to grow only 0.2 percent this year and 1.3 percent in 2025.