Germany industrial growth likely to slowdown in Q2

German industrial production fell by 1.4% in June. This results in only a small gain in Q2 of 0.1% on the quarter. A quarter-on-quarter growth rate of 0.5% for Q2 was expected, says Commerzbank.

Whilst energy output turned out 2.3% higher, construction output was 4.5% lower. Construction output, hence, fell for the third consecutive month. And manufacturing output in June also posted a fall by 1.3% on the month. As a result, industrial production came in at 0.1% in Q2, only slightly higher than in Q1. This suggests small downside risks to their forecast for GDP, for which a growth rate of 0.5% is expected on the quarter for Q2, says Commerzbank. 

Moreover, the German industry should get support from the weak external value of the currency. 

According to Commerzbank, "In July, the real external value of a fictitious D-mark according to our calculations was around 6% lower than one year previously. And the oil price, which looks set to remain low for the time being, should also play into the hands of the German economy."