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| Germany avoids recession with surprise return to growth – business live | Germany avoids recession with surprise return to growth – business live |
| (about 1 hour later) | |
| Rolling coverage of the latest economic and financial news, including German GDP for the last quarter | Rolling coverage of the latest economic and financial news, including German GDP for the last quarter |
| Most advanced economies has now reported growth figures for the last quarter (although we’re still waiting for Canada!). | |
| Germany, despite avoiding recession, is one of the weakest performers in July-September. | |
| Here’s a selection of the latest quarterly growth figures. | |
| US: +0.5% quarter-on-quarter | |
| Spain: +0.4% q/q | |
| The Netherlands: +0.4% q/q | |
| UK: +0.3% q/q | |
| France: +0.3% q/q | |
| Italy: +0.1% q/q | |
| Germany: +0.1% q/q | |
| Japan: +0.1% q/q | |
| Economist Rupert Seggins has pulled together the year-on-year growth figures: | |
| European Central Bank’s Vice President Luis De Guindos has predicted there’s a “very low” risk of a eurozone recession, now that Germany has returned to growth. | European Central Bank’s Vice President Luis De Guindos has predicted there’s a “very low” risk of a eurozone recession, now that Germany has returned to growth. |
| However, he also fears that growth could remain below potential, unless governments step up and do more. | However, he also fears that growth could remain below potential, unless governments step up and do more. |
| Reuters has the details. | Reuters has the details. |
| Here’s a round-up of reaction to Germany’s economy growing by 0.1% in the last quarter, avoiding the recession which many analysts expected. | Here’s a round-up of reaction to Germany’s economy growing by 0.1% in the last quarter, avoiding the recession which many analysts expected. |
| Dr. Kerstin Braun, President of Stenn Group. | Dr. Kerstin Braun, President of Stenn Group. |
| Ana Andrade, analyst at The Economist Intelligence Unit: | Ana Andrade, analyst at The Economist Intelligence Unit: |
| Matthew Cady, Investment Strategist at Brooks Macdonald: | Matthew Cady, Investment Strategist at Brooks Macdonald: |
| Japan’s economy has also been hit by the US-China trade war and the weakening global economy. | Japan’s economy has also been hit by the US-China trade war and the weakening global economy. |
| Data released overnight showed that the world’s third-largest economy grew an annualized rate of just 0.2 percent -- or 0.1% during the quarter. | |
| That’s down from 1.8% annualised growth in April to June. | |
| Just in: The eurozone grew by 0.2% in the third quarter of the year, helped by the modest recovery in Germany. | Just in: The eurozone grew by 0.2% in the third quarter of the year, helped by the modest recovery in Germany. |
| That’s according to the latest GDP report from Eurostat, which confirms last month’s ‘flash estimate’. | That’s according to the latest GDP report from Eurostat, which confirms last month’s ‘flash estimate’. |
| This matches the 0.2% growth recorded in the second quarter of 2019, but weaker than the 0.4% seen in Q1. | This matches the 0.2% growth recorded in the second quarter of 2019, but weaker than the 0.4% seen in Q1. |
| Just in: UK retail sales were weaker than expected last month. | Just in: UK retail sales were weaker than expected last month. |
| Retail sales volumes fell by 0.1% during October, the Office for National Statistics says. Economists had expected a rise of 0.2%. Strip out petrol, and volumes were down 0.3%. | Retail sales volumes fell by 0.1% during October, the Office for National Statistics says. Economists had expected a rise of 0.2%. Strip out petrol, and volumes were down 0.3%. |
| Over the last quarter, retail sales were only 0.2% higher, with food sales the only sector that rose. That implying UK consumers have been reluctant to spend on big-ticket items or discretionary goods. | Over the last quarter, retail sales were only 0.2% higher, with food sales the only sector that rose. That implying UK consumers have been reluctant to spend on big-ticket items or discretionary goods. |
| NEWSFLASH: UK services company G4S has been sensationally blacklisted by Norway’s sovereign wealth fund, for human rights abuses. | NEWSFLASH: UK services company G4S has been sensationally blacklisted by Norway’s sovereign wealth fund, for human rights abuses. |
| In a stinging rebuke, the Norway’s Council of Ethics said the company was contributing to “systematic human rights violations” of migrant workers in Qatar and the United Arab Emirates. | In a stinging rebuke, the Norway’s Council of Ethics said the company was contributing to “systematic human rights violations” of migrant workers in Qatar and the United Arab Emirates. |
| The Council, which monitors investments in Norway’s Government Pension Fund Global (GPFG), says: | The Council, which monitors investments in Norway’s Government Pension Fund Global (GPFG), says: |
| Here’s the story: | Here’s the story: |
| The GPFG has blacklisted companies before, often because they damage the climate or produce tobacco or coal. | The GPFG has blacklisted companies before, often because they damage the climate or produce tobacco or coal. |
| Last month, the Guardian reported that hundreds of migrant workers were dying in Qatar each month from heat stress. Many have been toiling to build the infrastructure for the 2022 football World Cup: | Last month, the Guardian reported that hundreds of migrant workers were dying in Qatar each month from heat stress. Many have been toiling to build the infrastructure for the 2022 football World Cup: |
| Car giant Daimler has highlighted the challenges in Germany’s economy, by announcing major job cuts. | Car giant Daimler has highlighted the challenges in Germany’s economy, by announcing major job cuts. |
| My colleague Jasper Jolly explains: | My colleague Jasper Jolly explains: |
| Germany’s return to (modest) growth may lift some pressure from Angela Merkel’s government to boost spending. But that could be a mistake. | Germany’s return to (modest) growth may lift some pressure from Angela Merkel’s government to boost spending. But that could be a mistake. |
| Berlin’s balanced budget policy had been under growing criticism as the economy contracted over the summer, factory output declined and exports fell. | Berlin’s balanced budget policy had been under growing criticism as the economy contracted over the summer, factory output declined and exports fell. |
| Some economists argued forcefully that Merkel’s administration should abandon the ‘debt brake’ that effectively bans budget deficits outside of a crisis. | Some economists argued forcefully that Merkel’s administration should abandon the ‘debt brake’ that effectively bans budget deficits outside of a crisis. |
| With borrowing costs at record lows, surely policymakers should boost investment? | With borrowing costs at record lows, surely policymakers should boost investment? |
| Many financial experts think so. Deutsche Bank has just surveyed nearly 700 of its clients, and found that most of them oppose the debt brake. | Many financial experts think so. Deutsche Bank has just surveyed nearly 700 of its clients, and found that most of them oppose the debt brake. |
| Deutsche’s Jim Reid says: | Deutsche’s Jim Reid says: |
| European stock markets have all fallen this morning, despite Germany’s better-than-expected growth report. | European stock markets have all fallen this morning, despite Germany’s better-than-expected growth report. |
| Mining stocks and technology firms are among the fallers, following that disappointing data from China overnight. | Mining stocks and technology firms are among the fallers, following that disappointing data from China overnight. |
| David Madden of CMC Markets explains: | David Madden of CMC Markets explains: |
| Germany’s escape from recession is being overshadowed by weak economic data from China. | Germany’s escape from recession is being overshadowed by weak economic data from China. |
| Fixed asset investment growth has fallen to its lowest level on record, at 5.2%, the National Bureau of Statistics reported. That suggests companies are reluctant to invest. | Fixed asset investment growth has fallen to its lowest level on record, at 5.2%, the National Bureau of Statistics reported. That suggests companies are reluctant to invest. |
| Industrial production growth only rose by 4.7%, below forecasts, as the trade war with the US bites. | Industrial production growth only rose by 4.7%, below forecasts, as the trade war with the US bites. |
| Retail sales growth dropped to a 16-year low too, implying consumers are more cautious. | Retail sales growth dropped to a 16-year low too, implying consumers are more cautious. |
| There are some signs that Germany’s economy could pick up, having effectively stagnated for the last six months, says Lee Hardman of Japanese bank MUFG. | There are some signs that Germany’s economy could pick up, having effectively stagnated for the last six months, says Lee Hardman of Japanese bank MUFG. |
| He tells clients: | He tells clients: |
| Germany’s car sector is dragging the economy back, warns Deka bank analyst Andreas Scheuerle. | Germany’s car sector is dragging the economy back, warns Deka bank analyst Andreas Scheuerle. |
| He says (via Reuters): | He says (via Reuters): |
| Germany’s government isn’t popping the champagne corks, despite avoiding the ignominy of recession this morning. | Germany’s government isn’t popping the champagne corks, despite avoiding the ignominy of recession this morning. |
| Economy minister Peter Altmaier has warned that growth is still too low, telling the ARD TV station that: | Economy minister Peter Altmaier has warned that growth is still too low, telling the ARD TV station that: |
| Carsten Brzeski, European economist at ING, says Germany’s economy is effectively stagnating -- despite dodging recession this morning. | Carsten Brzeski, European economist at ING, says Germany’s economy is effectively stagnating -- despite dodging recession this morning. |
| He points out that German manufacturers, once a powerhouse of the EU, are really struggling: | He points out that German manufacturers, once a powerhouse of the EU, are really struggling: |
| Brzeski also fears that Germany could struggle next year too. | Brzeski also fears that Germany could struggle next year too. |
| Economists are pleased to see that Europe’s largest economy has dodged recession. | Economists are pleased to see that Europe’s largest economy has dodged recession. |
| However, Fred Dukrozet of Swiss bank Pictet points out that it was pretty close -- Germany actually only grew by 0.08% in the last three months. | However, Fred Dukrozet of Swiss bank Pictet points out that it was pretty close -- Germany actually only grew by 0.08% in the last three months. |
| Increased spending by German consumers and government bodies helped to drag its economy out of recession, today’s GDP report shows. | Increased spending by German consumers and government bodies helped to drag its economy out of recession, today’s GDP report shows. |
| Exports have also picked up, despite trade tensions, helping the economy to expand by 0.1%. | Exports have also picked up, despite trade tensions, helping the economy to expand by 0.1%. |
| However, investment at German factories has fallen. | However, investment at German factories has fallen. |
| Statistics body Destatis says: | Statistics body Destatis says: |
| Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| It’s a particularly Guten Morgen in Germany today. The economy has just avoided recession with a surprise return to growth in July to September. | It’s a particularly Guten Morgen in Germany today. The economy has just avoided recession with a surprise return to growth in July to September. |
| Germany has defied the doom mongers by expanding its GDP by 0.1% in the third quarter of this year, new data shows. | Germany has defied the doom mongers by expanding its GDP by 0.1% in the third quarter of this year, new data shows. |
| That means Europe’s largest economy has stopped contracting, after suffering a 0.2% contraction in April-June (that’s just been revised down from a 0.1% fall). | That means Europe’s largest economy has stopped contracting, after suffering a 0.2% contraction in April-June (that’s just been revised down from a 0.1% fall). |
| This is welcome news for Europe’s economy, as it battles a global slowdown, Brexit uncertainty, and the spillover effects of the US-China trade war. | This is welcome news for Europe’s economy, as it battles a global slowdown, Brexit uncertainty, and the spillover effects of the US-China trade war. |
| Economists had predicted that German GDP would fall again in Q3, by around 0.1%. But it appears that household spending had helped overcome the weakness in German factories. | Economists had predicted that German GDP would fall again in Q3, by around 0.1%. But it appears that household spending had helped overcome the weakness in German factories. |
| On an annual basis, Germany’s economy has grown by just 1% in the last year - or just 0.5% on a ‘price and calendar adjusted basis’. | On an annual basis, Germany’s economy has grown by just 1% in the last year - or just 0.5% on a ‘price and calendar adjusted basis’. |
| Detail and reaction to follow.... | Detail and reaction to follow.... |
| The agenda | The agenda |
| 9.30am GMT: UK retail sales for October | 9.30am GMT: UK retail sales for October |
| 10am GMT: Eurozone GDP for Q3 2019 | 10am GMT: Eurozone GDP for Q3 2019 |
| 11am GMT: ECB chief economist Philip Lane speaks in Frankfurt | 11am GMT: ECB chief economist Philip Lane speaks in Frankfurt |
| 1.30pm GMT: US weekly jobless figures | 1.30pm GMT: US weekly jobless figures |