Rebound in German exports

Monthly exports ended the quarter by jumping in September after contracting in August.

Rebound in German exports

Berlin (dpa) – German exports rebounded more strongly than forecast in September, raising hopes that Europe's biggest economy might narrowly avoid stumbling into a recession.

Monthly exports from the nation ended the quarter by jumping 1.5 per cent in September after contracting by 0.9 per cent in August, the Federal Statistics Office (Destatis) said on Friday.

Imports were up 1.3 per cent in September from a meagre 0.1-per-cent August gain, Destatis said. September imports were seen stagnating by analysts.

Exports had been forecast to rise by just 0.3 per cent in September with a slew of economic uncertainties, notably the bitter US-China trade war, Britain's Brexit crisis and a restructuring of Germany's auto industry. It had all combined to push Europe's powerhouse economy to the brink of recession.

However, analysts now expect Destatis data to be released next Thursday will show the German economy narrowly escaped contracting for the second consecutive quarter with gross domestic product (GDP) stagnating rather than shrinking in the three months to the end of September.

The German economy slumped by 0.1 per cent in the second quarter following a sharp downturn in key manufacturing sector.

"The unexpected rebound in exports means that Germany might have avoided a technical recession at the very last minute," said ING Bank economist Carsten Brzeski. Economists see two consecutive monthly falls as representing a technical recession.

Still, the fragile state of the German economy comes against the backdrop of a sense of political uncertainty in the nation.

Chancellor Angela Merkel's coalition partners, the centre-left Social Democrats, are due to vote next month on whether to continue the alliance, while there are leadership tensions in her conservative Christian Democrats.

An economic slump is also likely to add to pressure on Berlin to boost spending to spur growth.

The government's panel of economic advisers this month slashed their growth forecasts for this year and next to 0.5 per cent and 0.9 per cent respectively.

"They have sent a wake-up call to political leaders to boost German economic growth," said Joachim Lang, the chief executive of the Federation of German Industry (BDI).

The build-up to next Thursday's GDP data has also coincided with the nation's quarterly corporate reporting season with a raft of chief executives also issuing downbeat economic outlooks.

"The weakening of the global economy accelerated clearly during fiscal 2019," said Siemens chief executive Joe Kaeser releasing the German engineering and technology giant's latest quarterly report.

"We expect global macroeconomic development to remain subdued in fiscal 2020, with risks particularly related to geopolitical and geo-economic uncertainties," Siemens said in a statement.

A surprise 1.4-per-cent jump in monthly German factory orders in September in data released on Wednesday appeared to offer a glimmer of hope that the manufacturing industry might be on the path to recovery.

German business confidence also held steady in October after picking up in September, according to a closely watched survey released last month by the Munich-based Ifo economic institute.

"In manufacturing, a stop has been put to the downward trend for now," Ifo said releasing the survey.

"The index (for the manufacturing sector) rose as a result of noticeably less pessimistic expectations," Ifo said.

However, German industrial production fell by more than forecast in September.

Output in the nation contracted by 0.6 per cent in September after posting a modest 0.4-per-cent gain in August, Destatis said on Thursday. Analysts had expected a 0.4-per-cent slump in September.

This resulted in industrial production contracting by 1.1 per cent in the third quarter compared with the second quarter.

Despite the monthly gain in order books, factory orders also slumped quarter-on-quarter in the three months to the end of September by 1 per cent.

Private consumption had up until recently been a key driving force behind the nation's growth rate.

However, signs have emerged that the manufacturing industry slowdown has started to impact on household spending.

German unemployment picked up last month on the back of the contraction in manufacturing, as a consequence dampening the mood among the nation's consumers.

Consumer confidence in the nation has dropped to its lowest level since 2016, according to a survey released last month by market research group GfK.