Industry continues driving German growth – Bundesbank

Growth in Germany, Europe’s biggest economy, likely held up at a high level in the third quarter, driven by superb industrial orders even as construction activity levelled off and private consumption dipped, the Bundesbank said in a monthly report.

“Industry, supported by buoyant export demand, is likely to retain its role as a main pillar of a strong economy,” the central bank said on Monday. “The order situation of industrial firms is excellent.”

Germany, boasting the euro zone’s lowest jobless rate, has roared ahead this year, lifting confidence across the currency bloc and giving the European Central Bank the biggest reason yet to curb extraordinary stimulus.

Car manufacturing appears to have moved past a rough patch in the quarter and orders, particularly from outside the euro zone, were excellent, the report noted.

Construction on the other hand probably did not contribute to overall growth, maintaining a relatively high level of output, and poor retail sales suggest that consumption likely eased, the Bundesbank added.

“Against the backdrop of very good consumer sentiment and favourable labour market and income prospects, no lasting deterioration in consumption is to be expected,” the bank noted.

Consumer prices on the other hand are likely dip towards the end of the year as high year earlier figures get knocked out from the time series.
Source: Reuters (Reporting by Balazs Koranyi; Editing by Francesco Canepa)