German Economic Data Has Been Astonishingly Bad

Germany bourse stock tradersREUTERS/Kai PfaffenbachTwo traders talk with each other on the floor of the German bourse in Frankfurt on July 21, 1997.

German economic data has been unquestionably bad in recent days.

Earlier today, we learned industrial production unexpectedly fell 0.5% year-over-year in June, missing expectations for a 0.3% gain. This was the first year-over-year decline since July 2013.

“June’s year-over-year reading confirms the German industry is decelerating from a 5% annual growth peak reached in January,” said Bloomberg’s Maxime Sbaihi and Niraj Shah in a piece titled “No End in Sight for the German Industrial Slowdown.”

“[T]he pace deceleration is worrying with the crisis in Ukraine adding further weakness,” said Pantheon Macroeconomics’ Claus Vistesen.

This report came hours before Russia announced a sweeping ban on food imports from the European Union.

Markets are down modestly in Europe with Germany’s DAX down by 0.1%.

The industrial production report follows Wednesday’s horrific factory orders report that showed orders unexpectedly plunged 3.2% month-over-month in June. Economists were expecting a 0.9% gain.

“Growth in new orders slumped at its fastest rate since September 2011, and the annual growth rate fell back to -4.3%,” said Vistesen on Wednesday. “The German statistical office reports that while domestic orders remained unchanged, new orders from the euro area fell an astonishing -10.4% from the previous month. “

Vistesen noted that all these numbers can be volatile, and that Germany recovered from similar economic hiccups in 2003 and 2004.

“[B]ut if the smoothed growth rate drops below zero, it would be a clear sign of warning,” he said.

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