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German output fall signals bumpy recovery

Reported by AAP
Saturday, September 7, 2013
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Industrial production in powerhouse Germany fell more than expected in July, data shows, indicating that any recovery in the eurozone is more unpredictable than hoped.

Industrial output in Germany, the eurozone's biggest economy, contracted by 1.7 per cent in July after expanding by 2.0 per cent in June, Germany's economy ministry said on Friday.

Analysts had been projecting a smaller decline of 0.5 per cent for July.

Financial markets have rallied in recent weeks, and borrowing rates in safe-bet eurozone nations have risen, as bullish investors foresee a clear turnaround in the single currency economy.

But eurozone data, not just in Germany, is making this bet perhaps too optimistic, a view advanced on Thursday by European Central Bank Chief Mario Draghi who said talk of recovery was premature.

Most fresh data on Friday seemed to confirm this cautious view.

Spain's factories axed output in July, official statistics showed, capping a near two-year industrial decline as domestic demand evaporated in a job-wrecking recession.

And data in France showed that the trade deficit there had widened in July, even after the economy as a whole, the eurozone's second biggest, edged out of recession in the second quarter.

"Data for July revealing falls in German and Spanish industrial production and a deterioration of Germany and France's trade balances support our view that the eurozone's economic recovery will be very slow," said Jennifer McKeown, Senior European Economist at Capital Economics.

22/10/2014 06:58Sydney, Australia. 22 October,2014
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