World recession fears grow amid slowdowns in Germany and US
Fears for the global economy are intensifying as Germany teeters on the brink of recession and the powerful US jobs market shows signs of slowing down.
German industrial output slumped again in July, defying hopes of a recovery to shrink by 0.6pc compared with June and 4.2pc lower than the same month last year. It means the 0.1pc contraction in GDP in the three months to June is likely to be followed by another fall in the third quarter of the year, taking the EU's biggest economy into recession.
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"The July industrial production headline combined with the dreadful retail sales number send a convincing signal that the German economy is in recession," said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.
The global industrial slump is one key factor behind the slowdown, alongside domestic issues including structural shifts in the car industry. But the weak foreign demand may be infecting the domestic economy, too. The slowdown is affecting the entire EU. Growth slowed to 0.2pc in the second quarter, the weakest since 2013. Germany and the UK contracted while the Italian economy stagnated.
Meanwhile, the US economy created 130,000 jobs last month - below the 160,000 analysts had predicted but enough to keep unemployment from rising. "The US economy will continue to expand as long as consumption growth remains strong enough to offset sluggish business fixed investment, the US and global industrial slowdown and declining exports," said economist Mickey Levy at Berenberg Bank.
© Daily Telegraph, London