Germany avoids recession with surprise return to growth – business live – The Guardian, Theguardian.com

Germany’s return to ( modest) growthmay lift some pressure from Angela Merkel’s government to boost spending. But that could be a mistake.

Berlin’s balanced budget policy had been under growing criticism as the economy contracted over the summer, factory output declined and exports fell.

Some economists argued forcefully that Merkel’s administration should abandon the ‘debt brake’ that effectively bans budget deficits outside of a crisis.

With borrowing costs at record lows, surely policymakers should boost investment

Many financial experts think so. Deutsche Bank has just surveyed nearly 700 of its clients, and found that most of them oppose the debt brake.

Deutsche’s Jim Reid says:

In terms of German fiscal policy only 4% thoughtGermanyshould stick to “black zero” type policies and only an additional 15% thought they should wait for a deep recession to deploy fiscal. 81% thought they should be either expanding fiscal now (33%) or be ready to do so over the next (month if growth stayed weak but positive) 48%).

European stock markets have all fallen this morning, despite Germany’s better-than-expected growth report.

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Mining stocks and technology firms are among the fallers, followingthat disappointing data from China overnight.

David Maddenof (CMC Markets) ***************************** Explains:

The Chinese economy continues to cool down as the latest economic reports showed overnight. Fixed asset investment, retail sales and industrial production came in at 5.2%, 7.2% and 4.7% respectively.

All reports registered declines in addition to undershooting economists’ forecasts. Mining stocks are largely lower this morning on the back of the data from China, as the country is a major importer of minerals.

Germany’s escape from recession is being overshadowed by weak economic data from China.

Fixed asset investment growth has fallen to its lowest level on record, at 5.2%, the National Bureau of Statistics reported. That suggests companies are reluctant to invest.

Industrial production growth only rose by 4.7%, below forecasts, as the trade war with the US bites.

Retail sales growth dropped to a 16 – year low too, implying consumers are more cautious .

Christian Witt(@ CnhWitt)

# CHNChina triple disappointment:
1 / Industrial production ***
2 / Fixed asset investments ***
3 / Retail sales ⬇️

All three releases disappointed analyst expectations.

(November) , 2019

There are some signs that Germany’s economy could pick up, havingeffectively stagnated for the last six months, saysLee Hardman of Japanese bank MUFG.

He tells clients:

Continued growth in the service sector has helped to offset more acute weakness in the manufacturing sector.

Recent leading indicators have provided tentative signs of optimism that the German economy is close to the worst point and could begin to pick up gradually in 2020. The latest ZEW survey, trade, factory orders reports have all surprised to the upside. The global manufacturing PMI bottomed in July providing encouragement that the global industrial slowdown is beginning to ease as well

Germany’s car sector is dragging the economy back, warns Deka bank analyst Andreas Scheuerle.

He says (via Reuters):

“The German economy got away with a black eye: the technical recession [is] avoided.”

“Germany’s economy is suffering from enormous global political uncertainty. Germany’s flagship industry, the automobile sector, is not running smoothly anymore. ”

Germany’s government isn’t popping the champagne corks, despite avoiding the ignominy of recession this morning.

Economy minister Peter Altmaier has warned that growth is still too low, telling the ARD TV station that:

“We do not have a technical recession, but the growth numbers are still too weak”

Carsten Brzeski, European economist at ING, says Germany’s economy is effectively stagnating – despitedodging recession this morning.

He points out that German manufacturers, once a powerhouse of the EU, are really struggling:

Recession or not, the German economy has fallen into a de facto stagnation, with quarterly GDP growth averaging a meager 0.1% QoQ since the third quarter of last year.

In fact, the German economy can still be divided into two worlds: the depressive world and the happy-go-lucky one. In the depressive world, there are very few signs of an imminent bottoming or recovery of the manufacturing sector since the summer of 2018. The sector is facing and will continue to face cyclical challenges, as ongoing trade conflicts, Brexit uncertainty and slower Chinese growth, along with structural challenges, disrupt the automotive industry. In the happy-go-lucky world, private consumption remains solid on the back of low inflation, low interest rates and a still-strong labor market. The construction sector keeps on booming and the government is also inserting some fiscal stimulus.

Brzeski also fears thatGermanycould struggle next year too.

Looking into 2020, it looks as if either the cyclical factors weighing on German industry will dissipate somewhat, with the entire economy rebounding, or the domestic part of the economy will also slow down. Either way, don’t forget that the structural challenges will not quickly and easily disappear, keeping a clear cap on any German rebound in 2020.

Carsten Brzeski(@ carstenbrzeski)

Germany: Did anyone say ‘recession ‘? | Snap | ING Think – Strong private consumption and exports helped the German economy to avoid recession in the third quarterhttps://t.co/CCx (GU) C

(November) , 2019

Economists are pleased to see that Europe’s largest economy has dodged recession.

However, Fred Dukrozet of Swiss bank Pictet points out that it was pretty close – (Germany) actually only grew by 0. 08% in the last three months.

Frederik Ducrozet(@ fwred)

Keine Rezession! German GDP rose 0 08% QoQ in Q3, following a downwardly-revised -0. 24% in Q2.@destatis_newsnotes that consumptions was the main contributor to growth, exports rose, imports flat, but capex excluding construction contracted.pic.twitter.com/pJKi4zB1nk

(November) , 2019

Increased spending by German consumers and government bodies helped to drag its economy out of recession, today’s GDP report shows.

Exports have also picked up, despite trade tensions, helping the economy to expand by 0.1%.

However, investment at German factories has fallen.

Statistics body Destatis says:

Compared with the second quarter of 2019, household final consumption expenditure increased, and so did government final consumption expenditure. Exports rose, while imports remained roughly at the level of the previous quarter. Also, gross fixed capital formation in construction was up on the previous quarter.

Gross fixed capital formation in machinery and equipment, however, was lower than in the previous quarter.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

It’s a particularly Guten Morgen inGermanytoday. The economy has just avoided recession with a surprise return to growth in July to September.

Germany has defied the doom mongers by expanding its GDP by 0.1% in the third quarter of this year, new data shows.

That means Europe’s largest economy has stopped contracting, after suffering a 0.2% contraction in April-June (that’s just been revised down from a 0.1% fall).

Holger Zschaepitz(@ Schuldensuehner)

German economy avoided recession with surprise growth .# Germanygrew 0.1% in Q3 QoQ vs -0.1% expected.pic.twitter.com/da9yI0AhRK

(November) , 2019

This is welcome news for Europe’s economy, as it battles a global slowdown, Brexit uncertainty, and the spillover effects of the US-China trade war.

Economists had predicted that German GDP would fall again in Q3, by around 0.1%. But it appears that household spending had helped overcome the weakness in German factories.

On an annual basis, Germany’s economy has grown by just 1% in the last year – or just 0.5% on a ‘price and calendar adjusted basis’.

Detail and reaction to follow ….

(The agenda)

9 . 30 am GMT: UK retail sales for October
• 10 am GMT: Eurozone GDP for Q3 2019
• 11 am GMT: ECB chief economist Philip Lane speaks in Frankfurt

(1.) pm GMT: US weekly jobless figures