Germany: will first-quarter growth surprise to the upside?

Chart of the week

Steep falls in Germany’s PMI(1) indices over the past few months have led to downward revisions in first-quarter growth forecasts. However, initial monthly economic data for industrial production, retail sales and foreign trade, which are now available for January and February, appear to suggest positive developments.


At 51.4, the composite PMI index is at its lowest level since 2013 and in line with annualised growth of approximately 0.4%. Yet monthly data have improved: February’s industrial production was up 0.7% and retail sales were 2.1% ahead of the average levels from the fourth quarter of 2018. Barring bad news for March, first-quarter 2019 growth could come out close to 2.0%.

Although history tells us that differences between forecasts based on monthly data and actual outcomes are possible, March’s monthly data will help to paint a more precise picture. Does reality coincide with the PMI readings or the monthly data? All will be revealed on May 15th, when the official growth numbers are released.

(1) The Purchasing Managers Index is a composite indicator of a country’s manufacturing activity.


The opinion expressed above is dated April 12, 2019, and liable to change.

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