GERMANY

摘要

Another industrial production setback in June has exacerbated fears that the German economy is heading for a cyclical downturn, as output slumped by -1.5% (m-o-m). The latest release rounded off a dismal Q2 performance in which production dropped-1.9% (q-o-q), marking afourth consecutive quarter of decline. Earlier, June's factory orders posted a 2.5% (m-o-m) rebound, although the -3.6% fall in y-o-y terms highlights a noticeable slowdown. Flagging activity in the crucial car industry has resulted from sliding sales in major export markets (such as China), cutting exports by -14% in the January-July period compared to the previous year. Moreover, slow progress in transitioning into the rapidly-growing electric vehicle market has left domestic firms struggling to adapt to shifting market trends. After our August 12 survey deadline, the German Statistics Office revealed that Q2 GDP contracted by -0.1% (q-o-q), faltering from +0.4% in Q1. Given that the broad-based deterioration in monthly indicators has persisted, the likelihood of a recession is growing. Moreover, the German finance minister admitted that an escalation in the US-China trade war could exaggerate the economy's weakness. July's Ifo business climate index plunged to its lowest level since April 2013, as confidence in the manufacturing sector plummeted. Falling expectations for services and trade indicate that the malaise is spreading, with only the construction index boasting a trace of optimism.