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Financial News: German Industrial Output Rebounds; Exports Remain Flat

German Industrial Output Rebounds; Exports Remain Flat

03/09/2020 - 08:31:00 (RTTNews)

(RTTNews) - Germany's industrial production rebounded at the fastest pace in more than two years, while overall exports remained unchanged in January as shipments to China went down, data from Destatis revealed on Monday.

However, the outlook remains bleak as the coronavirus, or COVID19, has hurt economic activity in a big way and caused supply chain disruptions across the world. At the start of the week, the government announced support measures for companies and workers.

Industrial production grew 3 percent on a monthly basis, reversing a revised 2.2 percent drop in December. Production was forecast to grow moderately by 1.7 percent. This was the biggest growth since November 2017.

At the same time, industrial output fell 1.3 percent from last year, but slower than the 5.3 percent decrease logged in December, and the expected annual fall of 3.8 percent.

Excluding energy and construction, industrial production was up 2.9 percent. Energy production slid 0.2 percent, while construction output increased 4.7 percent due to mild weather.

In spite of the recently more favorable development of incoming orders and the business climate, the outlook for the manufacturing industry remains uncertain due to the new risks from the spread of the Corona virus, the economy ministry said.

Ralph Solveen, a Commerzbank economist said, despite the good start, GDP is likely to decline in the first quarter, in particular as parts of the previously very stable service sector are currently suffering massively from the spread of the coronavirus.

The grand coalition of Chancellor Angela Merkel decided to increase investments by EUR 3.1 billion in each of the years from 2021 to 2024.

"As a result of the coronavirus, no company in Germany should go bankrupt, nor should any job be lost as much as possible," the coalition said in a statement on Monday. The measures were decided after talks late Sunday.

The coalition also lowered the threshold for companies to claim short-term work benefits.

Separate data from Destatis revealed that exports remained unchanged in January, while imports recovered after falling for two straight months.

Exports remained flat in January from December, when shipments were up 0.2 percent. Economists had forecast exports to grow 0.8 percent.

Meanwhile, imports advanced 0.5 percent, following a 0.3 percent drop in December. Imports were forecast to gain 0.6 percent.

Consequently, the trade surplus declined to a seasonally adjusted EUR 18.5 billion from EUR 19 billion a month ago.

Exports to China decreased 6.5 percent and imports from China fell only 0.5 percent. However, the results available so far do not clearly show any coronavirus effect, Destatis said.

On a yearly basis, exports and imports fell 2.1 percent and 1.8 percent, respectively. As a result, the trade surplus decreased to an unadjusted EUR 13.9 billion from EUR 14.5 billion in the previous year.

Further, data showed that the current account surplus dropped to EUR 16.6 billion from EUR 17.6 billion in the same period last year.

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