German factory output and exports dive as Brexit stockpiling eases – business live | Business

German factory output and exports dive as Brexit stockpiling eases – business live | Business
German factory output and exports dive as Brexit stockpiling eases – business live | Business

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

A flurry of weaker-than-expected economic data from Germany this morning has heightened fears over the health of the global economy.

German industrial output slumped by 1.9% month-on-month in April, data firm Destatis reports. That’s much worse than the 0.5% drop economists expected.

It means output was a hefty 1.8% lower than a year ago – before Germany began to slide into a near-recession.

Demand for heavy duty capital goods took a big hit, down 3.3%, a sign that customers were reluctant to commit to new expensive machinery. Consumer goods output fell 0.8%, with intermediate goods down 2.1%, so the decline was wide-ranging.

Destatis news

#Production in April 2019: -1.9% seasonally adjusted on the previous month.

June 7, 2019

Such a weak performance from Europe’s largest economy is a blow. It helps explain why the European Central Bank sounded rather downbeat on Thursday, as it pledged to leave interest rates at their current record low for another year at least.

But that’s not all! Separate data shows that German exports slumped by 3.7% month-on-month in April, which Reuters says is the biggest drop since August 2015.

Imports shrank too, by 1.3%, helping to narrow Germany’s traditional trade surplus to €17.9bn, from €20.4bn a year ago.

Destatis news

German exports in April 2019: -0.5% on April 2018. #foreigntrade

June 7, 2019

It all suggests that the US-China trade war and the slowdown in eurozone growth in recent quarters is continuing to weigh on Germany — not a good sign for growth prospects this year.

Reaction to follow!

Also coming up today

Investors around the globe are waiting for the latest US unemployment report, due at lunchtime UK time.

May’s Non-Farm Payroll is expected to show that 175k new jobs were created last month, down from 263k in April. The jobless rate is expected to remain steady at 3.6%, whilst average hourly earnings are expected to inch higher to 0.3% m/m, up from 0.2% in April.

But the NFP is notoriously volatile and hard to predict. A bad report could put more pressure to cut US interest rates, as Jasper Lawler of London Capital Group explains:

The near term direction for the markets depend on whether the gate is open or shut. Should the NFP disappoint, expectations of a Fed cut potentially as soon as June or July could rise.

The CME FedWatch shows the markets are seeing a 22% probability of a hike in June and a 55% probability of a hike in July.

The agenda

  • 8.30am BST: Halifax survey of UK house prices for May
  • 1.30pm BST: US non-farm payroll report for May



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