German manufacturing: Good start, but no turnaround – Commerzbank

Dr Jörg Krämer, Chief Economist at Commerzbank, notes that the German manufacturing made a strong start to the New Year and in the first quarter posted a growth rate of 1.8% on the final quarter of 2015.

Key Quotes

“The overall economy also expanded much more quickly in Q1 than in the preceding quarters. At the start of the year, GDP was 0.7% up on the quarter.

But this strong growth is unlikely to be sustained, as it was mainly driven by construction activities, which profited from the mild weather. A countermovement to the first quarter is likely to follow in the second quarter.

Leading indicators such as order intake suggest that the German economy continues expanding, but not at the pace seen in Q1. Orders (excluding other vehicles) from within Germany and from other European countries have trended sideways since the spring of 2015. Only orders from third countries have trended upwards since the autumn of last year; however, the strong increase in March was overstated by big-ticket orders.”