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Analysts at Rabobank suggest that this morning’s data revealed that Germany again bucked the trend in Europe as the German economy did not meaningfully slow down, after having settled at a slightly slower growth rate than the extraordinary pace in 2017.

Key Quotes

“German Q2 GDP came in at 0.5% q/q. This is 0.1pp higher than the first quarter, which was even revised up to 0.4% from an earlier 0.3%.”

“According to the press release from Destatis, the statistics office, the gains were mainly driven by strong consumption by both the private and public sectors, as well as increases in investments. These observations suggest that strong domestic demand is outstripping any potential negative impact from the deteriorating global environment – at least for now.”

“So far, the Juncker-brokered truce between the EU and the US has shielded the German industry from punitive tariffs on German-made cars, but who says Trump doesn’t change his mind? Additionally, Turkey’s turmoil could affect German exports to some extent, even though Turkey itself isn’t a major export partner for the country. Moreover, the abovementioned warning signal from recent Chinese data could spell further external risks ahead.”

“The German data is followed by a second estimate of Eurozone GDP, which came in at just 0.3% in the earlier estimate – although part of this was due to rounding (the unrounded quarterly growth was 0.34%). Whether the slightly better than anticipated German data pushes the Eurozone average north enough to allow for a rounding up instead of down will be revealed at 11:00 CET.”