Falling exports a drag on German economy

German exports fell sharply in November and industrial output also declined, suggesting Europe’s largest economy ended 2014 on a weak note.

Falling exports a drag on German economy

The slowdown in the eurozone anchor both reflected and further fed weakness across the currency bloc, which is still struggling to emerge from a long-running economic crisis.

Some economists thought the rapid fall in oil prices could provide a boost for Germany’s powerful exporters, while a weakening of the euro may help companies selling beyond Europe.

In November however, seasonally-adjusted exports fell for a second consecutive month, dipping by a bigger-than-expected 2.1%, data from the Federal Statistics Office showed yesterday.

Industrial output decreased by 0.1% as construction activity weakened and energy production fell, separate Economy Ministry data showed. That was weaker than a consensus forecast for a 0.4% increase and came as Spanish industrial production stagnated while French output dropped by 0.3% .

Alongside earlier figures that showed German industrial orders plunging, yesterday’s figures complete a poor outlook for the fourth quarter.

“Today’s data provides further evidence that the German economy has not yet fully recovered from the soft spell of the summer,” said Carsten Brzeski, economist at ING.

Economists generally expect Germany to post meagre growth in the fourth quarter, rounding off a disappointing year which saw the economy contract in the second quarter and barely grow in the third.

Bankhaus Lampe economist Alexander Krueger said while production — which rose by 1% in the less volatile two-month comparison — probably boosted gross domestic product in the fourth quarter, the economy was unlikely to have grown by more than 0.2% between October and December.

There have been some positive signs for fourth-quarter growth, though. Sentiment indicators took a turn for the better late last year and retail sales climbed in October and November.

Germany’s full-year 2014 GDP data is due on Thursday. The country’s government has forecast 1.2% annual growth. While Germany has traditionally been an export-oriented economy, shipments abroad have suffered this year as demand from weakened eurozone trading partners faltered and crises abroad hurt business confidence, leading to investment delays.

A breakdown of unadjusted trade data showed shipments to the European Union, Germany’s largest export market, rising 4.8% on the year in November, while exports to countries outside Europe dropped 3%.

Volker Treier, head of foreign trade at Germany’s DIHK Chambers of Commerce, said the export outlook for 2015 was better, partly due to the oil price halving in six months.

* Reuters

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