German July Industrial Production Edges Up, Exports Fall

Sep 7, 2007 - German industrial production grew less than expected in the month of July as there was a mild decline in exports, official data revealed Friday

A report from the Economy and Technology Ministry showed that the industrial output in the largest Euro zone economy grew 0.1% month-over-month in July, while economists were looking for a rise of 0.9%. In June, industrial output dropped 0.2%, revised from the 0.4% decline estimated earlier.

Compared to the same month last year, industrial production grew working day adjusted 4.6% in July, smaller than a revised 5.2% growth seen in the prior month. The June number was revised up from the 5.1% initially estimated. Markets had expected a slightly higher growth of 4.9% for July.

In July, manufacturing production moved up 0.2% and construction output revealed a marked increase of 1.3%. Meanwhile, energy output declined 0.3%.

During the two-month period from June to July, overall industrial output grew 0.9% from the previous two-month period.

Earlier in the day, a separate report from the statistical office indicated that the German trade surplus widened to 17.9 billion euros in July. The trade surplus increased from the 16.5 billion euros registered in June. A year ago, the trade surplus amounted to 13.0 billion euros. Economists expected an excess of 15.6 billion euros.

On a seasonally adjusted basis, the trade balance showed a surplus of 16.4 billion euros.

Exports grew 11.8% annually, while it dropped 0.1% from the prior month. Meanwhile, imports increased 6.3% on a yearly basis to 63.6 billion euros in July. Compared to the last month, imports were down 2.4%.

The current account surplus narrowed to 14.1 billion euros from a revised surplus of 16.4 billion euros recorded in June. The number was revised down from the 16.6 billion euros estimated earlier. The current account surplus amounted to 7.3 billion euros in the prior year. The current account surplus for July came in better than the expected number of 12.2 billion euros.

Data released by the Ministry a day earlier revealed a 7.1% decline in manufacturing new orders, in contrast to a revised growth of 5.1% registered in June.

Commenting on the industrial production numbers, Frédérique Cerisier of BNP Paribas said, “For the time being manufacturing activity is still supported by a high level of incoming new foreign orders of capital goods. Were global investment and demand for equipment to moderate more rapidly than previously expected in the coming quarters, the manufacturing outlook could deteriorate very quickly”.