German Economic Data Has Been Astonishingly Bad
German economic data has been unquestionably bad in recent days.
Earlier Thursday, 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," Bloomberg's Maxime Sbaihi and Niraj Shah said 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," Pantheon Macroeconomics' Claus Vistesen said.
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, which showed that 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%," Vistesen said 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 could 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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