German economic weakness not over yet
Falling industrial output and exports suggest Germany's current economic weakness is not over yet, nevertheless, Europe's biggest economy looks set to regain momentum this year, analysts said on Friday.
Coming hot on the heels of a unexpectedly sharp drop in factory orders earlier this week, the economy ministry calculated in regular data that German industrial production shed 0.1 percent in November, pulled down by declining activity in the energy and construction sectors.
At the same time, the federal statistics office Destatis estimated that German exports fell by 2.1 percent in November, causing the country's trade surplus to contract sharply.
"November's hard data indicate that Germany's phase of economic weakness is not yet over, after meagre growth of 0.1 percent in the third quarter," said Natixis economist Johannes Gareis.
Nevertheless, at the same time, a lot of the October data had been revised upwards, taking the sting out of the disappointing November numbers, analysts said.
"Early indicators such as order intake and the Ifo business climate index create hope that the German economy will soon pick up at a stronger rate again," said Commerzbank economist Marco Wagner. BayernLB economist Stefan Kipar agreed.
Taking the October and November data together, "the indications are that gross domestic product (GDP) growth was positive again in the fourth quarter," he said.
"We're assuming that German output will continue its positive trend in the coming months. Low energy prices will boost consumers' purchasing power and exporters will benefit from the weak euro this year. The economy should gather momentum during the course of 2015," Kipar said.
"When looking at other hard data in October-November, the picture looks similarly encouraging," said UniCredit economist Andreas Rees.
Retail sales were up strongly, and higher employment and rising wages "provide enough ammunition to keep private consumer expenditures going," he said.
Official 2014 GDP data were scheduled for release next week and "we expect growth in 2014 to be 1.5 percent," compared with just 0.1 percent in 2013, Rees said.
Berenberg Bank economist Christian Schulz was likewise confident that Germany would post "modest output growth in the final quarter of 2014".
"Although the aftermath of the confidence shock triggered by Russia's aggression against Ukraine will probably still weigh on investment, domestic demand and in particular consumption look set to drag output upwards," Schulz said.
"For early 2015, new short-term risks have emerged, especially the Greek political crisis. However, the sharp fall in the oil price should more than offset that over time and help Germany reach trend growth rates from the spring onwards," Schulz said.