By Wolf Richter: Germany, the largest economy in Europe, the miracle economy that is
being held up as example of how an economy should be run, and the
all-powerful engine that is supposed to pull the Eurozone out of its
deep mire, is sinking into a mire of its own.
When second quarter GDP “unexpectedly” – a word now attached to much
of the economic data coming out of that country – declined 0.2% from the
first quarter, it wasn’t taken seriously. It was a blip, supposedly.
The third quarter would more than make up for it, by some miracle of
German efficiency or industriousness, presumably. I called it, “German Economy Swoons.”
Shoes have been dropping ever since. Yesterday, it was reported that demand for German goods dropped 5.7%, the worst monthly drop since 2009. Foreign orders plunged 8.4%, with orders from the Eurozone down 5.7%, but orders from all other countries – and that includes Germany’s two largest and all-important export destination outside the Eurozone, China and the US – down a fabulous 9.9% (made me wonder what the statisticians did to keep it out of the double digits, which would have been utterly embarrassing).
The problem with orders is that they lead export-addicted German GDP: if orders drop, so does GDP, but with a quarter lag. And orders have taken a decided turn south [This Chart Shows How Plunging German Factory Orders Sink the Economy].
Today, another shoe dropped. Industrial production fell 4.0% in August on a monthly basis and 3.0% year over year, after a rise of 1.6% in July, seasonally and working-day adjusted. The worst monthly drop since January 2009.
When second quarter GDP “unexpectedly” – a word now attached to much
of the economic data coming out of that country – declined 0.2% from the
first quarter, it wasn’t taken seriously. It was a blip, supposedly.
The third quarter would more than make up for it, by some miracle of
German efficiency or industriousness, presumably. I called it, “German Economy Swoons.”Shoes have been dropping ever since. Yesterday, it was reported that demand for German goods dropped 5.7%, the worst monthly drop since 2009. Foreign orders plunged 8.4%, with orders from the Eurozone down 5.7%, but orders from all other countries – and that includes Germany’s two largest and all-important export destination outside the Eurozone, China and the US – down a fabulous 9.9% (made me wonder what the statisticians did to keep it out of the double digits, which would have been utterly embarrassing).
The problem with orders is that they lead export-addicted German GDP: if orders drop, so does GDP, but with a quarter lag. And orders have taken a decided turn south [This Chart Shows How Plunging German Factory Orders Sink the Economy].
Today, another shoe dropped. Industrial production fell 4.0% in August on a monthly basis and 3.0% year over year, after a rise of 1.6% in July, seasonally and working-day adjusted. The worst monthly drop since January 2009.
