German economy grows and morale up on back of exports and Greek deal
A strong rise in German exports outstripped gains in imports to power growth of 0.4pc in Europe's largest economy in the second quarter, data showed yesterday.
The outlook for industrial companies is buoyed by full order books, but investments flagged in the quarter, clouding the picture as concerns over a global slowdown intensify.
The figures from the Federal Statistics Office showed Germany's export engine, traditionally its major growth driver, was in rude health at the mid-point of 2015. Exports rose by 2.2pc on the quarter in the April-June period, outperforming a 0.8pc increase in imports. This meant that foreign trade added 0.7 percentage points to GDP while domestic demand subtracted 0.3 percentage points.
However, gross capital investment subtracted 0.1 percentage points from GDP and inventories deducted 0.4pc as companies ran down stocks.
"Companies are not investing as they really should," said Ulrike Kastens at Sal Oppenheim.
"The low interest rate is not decisive for them, but rather developments in key markets. Here there are major question marks, as developments in China and other emerging markets show."
Earnings by German companies have been exceeding expectations, though they are concerned about the uncertain global outlook. Germany's benchmark DAX share index fell 4.7pc on Monday following a rout in Chinese markets.
Around half of Germany's 30 blue-chip companies reported consensus-beating financial results for April-June.
More than two-thirds nonetheless stuck with their guidance for the year as a whole as political and economic uncertainties remain in focus.
In positive news for the economic outlook, figures released earlier this month showed industrial orders recorded their biggest gain since early 2011 in April-June thanks mainly to strong foreign demand.
However, the mood among analysts and investors in Germany worsened this month due to concerns about the unstable global backdrop.
Meanwhile, German business morale improved in August, a leading survey showed yesterday, suggesting company executives are encouraged by the agreement of a new bailout for Greece and robust demand.
The Ifo economic institute's business climate index, based on a monthly survey of some 7,000 firms, rose to 108.3 in August from 108.0 in July. (Bloomberg)