"August's survey keeps the good news rolling in for the German manufacturing sector, with improvements in domestic sales and a rebound in export demand combining to generate the fastest expansion of output volumes since the middle of 2011"
- Tim Moore, senior economist at Markit
Europe's powerhouse, Germany, may not be performing as well as it can be expected as exports and industrial production fell surprisingly. The Federal Statistics Office showed assembly lines in Germany's factories slowed down significantly in the middle of summer, with industrial production falling 1.7% in July, outpacing analysts' prediction of a 0.5% and far below from a downwardly revised 2.0% in the prior month. When measured on the yearly basis, production, which comprises output in the industrial sector on the economy, including mining and utilities, sank 2.2% in June, versus the 0.1% gain registered in the preceding month. Earlier this month, data showed factory orders fell more than expected in July.
Additionally, export-oriented Germany recorded a 1.1% drop in shipments, as the country delivered less to its Eurozone neighbours. Shipments to the Eurozone nations, which accounts around 30% of total German exports, declined 0.7%. Despite a drop, Europe's largest economy still amassed the surplus of 16.1 billion euros. These figures are disappointing as German exporters helped the country avoid the recession and pulled out the whole region out of its longest-ever contraction. However, despite the latest data economists still expect German manufacturing to have a strong positive contribution to German GDP in the third quarter.
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