The German Growth in 3 graphs

The GDP growth was 1.7% (at annual rate) during the fourth quarter of 2016.It was a mere 0.4% in the third quarter. For 2016 GDP was up 1.8% after 1.5% in 2015.
The carry over growth for 2017 at the end of 2016 is 0.5%. It was the same number at the end of 2015 for 2016.
Domestic demand is currently the main support for growth with a high contribution from government expenditures. Since the first quarter of 2015, GDP growth is +1.5% on average and the government expenditures’ contribution is +0.7%; Almost half of it, that’s a large number (data until Q3 2016, the detail for Q4 is not available yet).
Construction is also an important contributor.
Government expenditures and construction are the German response to the refugees’ crisis, leading to a more autonomous .growth. Net exports have a negative contribution (imports were up due to a robust domestic demand).
Growth in Germany follows now a more autonomous and centered growth framework. It has a positive and persistent impact of the Euro Area growth.

The first graph shows the stability of the German business cycle. There is no break in the crisis contrary to what was seen in every other developed country. This reflects the absence of rupture in the private domestic demand. (The break in 2008 is mainly associated with external trade in Germany)

The second graph shows the cumulated contributions of different sources of demand to GDP growth. On the right part of the graph we see that the main sources of growth are the private demand and government expenditures. Since 2013, the net exports contribution is almost neutral (no upward trend).
This support from domestic demand is a source of improvement for the Eurozone
The third graph is the government expenditures’ quarterly contribution to GDP growth since 2015. On average GDP growth was 1.5% and the contribution was 0.7%.

Three Graphs on the German Labor Market

The number of unemployed has slightly increased in August (1 000). Compared to August 2013 this number has decreased by -45 000.
Employment is on a positive trend. During the last 3 months (May – July) it was up by 0.9% at annual rate. But surveys this summer have cast a doubt on such a momentum for the coming months. Continue reading

Germany – Slower Momentum in the Manufacturing Sector in Q2

The German industrial production index dropped in May bu -1.4% compared to April. Carryover growth for the second quarter is negative at -1.1%. It has to be compared to a 0.8% growth during the first quarter (non annualized figures)
3 remarks:1 – On the first chart we notice that the index is almost flat since the beginning of 2011. There is a strong divergence with the American one. Is there a problem of competitiveness in Germany? Continue reading

3 Charts to Characterise the German Labor Market

Employment continues to rise in Germany in April. However, the pace could  change in coming months, particularly with regard to the IFO survey and its correlation with the job annual change.
It is necessary to separate short-term and medium term issues.
In the short-term, two trends are noteworthy
In May the number of unemployed increased by 24,000. This is in contrast to the most recent developments as shown in the graph. Over a year, however, the number of unemployed continues to shrink. It is possible that in May, a random factor (holidays, … ) could have played negatively. Continue reading

Employment – France vs Germany: Two different pictures of the business cycle

New Information on labor markets in France and Germany have just been published for January.
In France the number of unemployed registered at Pôle Emploi was published. Pôle Emploi is the French agency on unemployment. In Germany, employment statistics for January were released.
The two sets of information are not directly comparable but both are signals on the labor market momentum. Continue reading

PMI/Markit Surveys in November – Weaker for the Euro Area, Stronger in Germany but dramatic for France

The flash estimate of the PMI/Markit survey for the Euro Area implies a momentum that is weaker than it was during last summer. The synthetic index is still growing but at a slower pace (see chart 1 below). The same pattern can also be seen in the production index. In the New Orders index the pace is positive but as slow as it was in October. The employment index has dropped in November; this is worrisome as it was showing almost stable employment in September. In other words, the current recovery could be weaker than expected and that could be also a reason, beside inflation, for the ECB to adopt a more accommodative monetary policy.
The weakness in November comes from the services sector. The manufacturing sector momentum is still robust and continues to expand.
With the flash estimate we just have details for Germany and for France. We see on the chart below that their profiles diverge dramatically. Continue reading