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Peter Vanden Houte, chief economist at ING, notes that the German industrial production unexpectedly expanded by 0.3% in August, defying the consensus forecast for a -0.1% decline.

Key Quotes

“Manufacturing output rose 0.7%, compensating for the 0.6% decline in July, while construction output shrank 1.5%. Year-on-year, industrial production fell by 4%, unchanged from July.”

“This is finally some good news coming from the biggest economy in the eurozone. However, there is no reason to get overexcited. Industrial production is always volatile during the summer months, so September will be more important to assess whether we can really talk about a trend reversal.”

“With the drop in export orders, one of the main culprits of the weakness in manufacturing, it is obvious that German industry remains extremely sensitive to further developments in the trade war.”

“We believe that at the beginning of next year, additional budgetary stimulus might be put in place, paving the way for an economic upturn in the course of 2020.”