German growth slightly slower than expected in Q2

Marco Green
August 15, 2017

Figures released by Destatis last week showed that German exports unexpectedly fell by 2.8 percent in June compared to the month before.

The provisional figure was lower than the 0.7 percent forecast by analysts surveyed by Factset.

The German economy grew by less than expected in the second quarter as net trade dampened an overall expansion driven by strong household spending and rising state expenditure, the country's Federal Statistics Office has said.

Germany's economic growth slowed in the second quarter as exports cooled, official data showed Tuesday, but strong domestic demand helped to keep Europe's powerhouse humming just weeks before a general election.

"Even Angela Merkel's junior coalition partner, the social-democratic SPD, finds it hard to get the credits from the electorate for the current strong growth performance".

Carsten Brzeski, ING Bank NV economist, said Germany's economic success story goes continues and there is very little reason to fear a sudden end to the current performance.

German consumers are increasingly in a spending mood as low unemployment contributes to higher earnings and the lasting low interest rate environment disincentivizes saving. There was an increase in fixed capital formation in machinery and equipment, in construction and in other fixed assets.

According to data published by the US Commerce Department, retail sales grew by 0.6% in July, rallying from a 0.3% contraction the month before and outpacing initial estimates that they would only grow 0.4%.

The economy expanded 2.1 percent from a year earlier. when adjusted for working days.

It is also likely to bolster expectations that the European Central Bank will begin to phase out stimulus measures next year, amid increasing signs that the region's recovery is broadening, economists say.

Price-adjusted GDP growth came in at 0.8% versus 3.2% a quarter ago.

Other reports by Click Lancashire

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