BERLIN (Reuters) – German industrial activity is sluggish and recent data point to slower growth in the service sector, the German Economy Ministry said, adding this suggested Europe’s largest economy would experience a weak general economic trend in the second quarter.
“After what is shaping up to be a subdued development in the second quarter, the forces of economic upswing could become more prominent again if the external environment settles,” the ministry said in its monthly report published on Monday.
But it added that there were significant downside risks such as trade conflicts, Britain’s expected departure from the European Union and geopolitical tensions.
The Bundesbank has said economic output will fall slightly in the second quarter.
Four in five Albertans pessimistic about economy
Four out of five Alberta residents expect the provincial economy to deteriorate over the next year, according to a new poll.
The public opinion survey, conducted by the non-profit Angus Reid Institute, said Canadians as a whole appear to be worried about the economy, with 43 per cent expecting a worsening of economic conditions in their province versus 21 per cent expecting an improvement.
However, the survey also highlighted stark regional differences. In Quebec, for example, residents are more likely than not to say that conditions in the province will improve, while in Alberta 79 per cent expect conditions to worsen.
Sixty-four per cent of Albertans — the highest rate of any province — are also concerned about potential household job losses. The number of Albertans who identified potential job loss as a “serious worry” is more than double the national average (34 per cent versus 14 per cent).
The Angus Reid Institute also annually asks respondents if their standard of living is better or worse, and there, regional differences are also striking. In Quebec, the highest number of respondents say their standard of living has improved in a decade of tracking, while the number is lowest in Alberta. Notably, Alberta’s proportion of positive responses dropped by half immediately after Justin Trudeau’s Liberals formed government in 2015 and have remained low since. This year, 56 per cent of Albertans said their standard of living has worsened over the past 12 months.
German economy grows slightly in 3Q
BERLIN — Germany’s gross domestic product returned to modest growth in the third quarter, the Federal Statistical Office reported Thursday, staving off a widely-feared recession in Europe’s largest economy.
The Wiesbaden-based agency said the economy grew 0.1% in the July-September period over the previous quarter, largely driven by public and private consumption. Exports rose as well, while imports remained roughly at the second quarter level, the agency reported.
It said, however, that the second quarter contraction was greater than preliminary figures had shown, with the economy shrinking in the April-June period by 0.2% compared to the 0.1% originally reported.
Two straight quarters of declining output is considered a technical recession, which many economists had predicted that Germany had entered in the third quarter.
A week ago, the German government’s independent panel of economic advisers reported that a 0.1% third-quarter contraction was likely.
Though they said there were no signs of a “broad, deep recession,” the panel also said there was no sign of a “strong revival” in the fourth quarter. The five-member panel cut its economic forecast to growth of 0.5% this year and 0.9% in 2020, compared with its forecast in March of 0.8% this year and 1.7% next year.
And even though the recession has been averted, the numbers show Germany is in a de facto stagnation, and its export-driven economy still faces headwinds due to international uncertainty.
Services companies and the jobs market have held up well in Germany, but the industrial sector, led by automobiles and factory machinery, has seen declines amid trade tensions.
Among other things, the dispute between U.S. President Donald Trump and the Chinese leadership over China’s trade surplus with the U.S. has dampened trade and industrial output by raising uncertainty about whether and where more tariffs might be imposed. Another negative is uncertainty about the date and terms of Britain’s departure from the European Union.
In their report, the government economists cautioned that a no-deal Brexit could yet chop 0.3 percentage points off next year’s German growth, reducing it to 0.6%.
Britain is currently scheduled to leave the European Union by the end of January, but whether, how and when it leaves will depend on the outcome of an election next month.
China economy grinds lower as October indicators miss forecasts
By Gabriel Crossley and Huizhong Wu
BEIJING (Reuters) – China’s industrial output grew significantly slower than expected in October, as weakness in global and domestic demand and the drawn-out Sino-U.S. trade war weighed on activity in the world‘s second-largest economy.
Industrial production rose 4.7% year-on-year in October, data from the National Bureau of Statistics released on Thursday showed, below the median forecast of 5.4% growth in a Reuters poll.
Indicators showed other sectors also slowing significantly and missing forecasts with retail sales growth back near a 16-year trough and fixed asset investment growth the weakest on record.
The disappointing economic data adds to the case for Beijing to roll out fresh support for the economy after China’s economic growth slowed to its weakest pace in almost three decades in the third quarter as the bruising U.S. trade war hit factory production.
Broad activity in China’s manufacturing sector remains weak with data on the weekend showing factory gate prices falling at their fastest pace in more than three years in October.
China’s official Purchasing Managers’ Index (PMI) also showed activity in the factory sector remained in contraction for a sixth straight month in the month.
“Admittedly, optimism surrounding a phase-one U.S.-China trade deal could provide a boost to corporate investment in the near term,” Capital Economics China Economist Martin Lynge Rasmussen said.
“But even if a minor deal is agreed upon in the coming months, this would merely allow the focus to shift to the more intractable issues that we think will eventually lead the trade talks to break down. The case for further monetary easing remains intact.”
Other data on Thursday showed China’s property investment growth in the first 10 months of the 2019 slowing year-on-year.
The tariff war between China and the United States has hit global demand, disrupted supply chains and upended financial markets.
While some signs of recent progress in trade negotiations between the superpowers have cheered investors, officials from both sides have so far avoided any firm commitments to end their dispute.
That uncertainty has continued to weigh on manufacturers and their order books.
Thursday’s data also showed fixed asset investment, a key driver of economic growth, grew 5.2% from January-October, against expected growth of 5.4%. The January-October growth was the lowest since Reuters record began in 1996.
Private sector fixed-asset investment, which accounts for 60% of the country’s total investment, grew 4.4% in January-October.
On Wednesday, China’s State Council said Beijing would lower the minimum capital ratio requirement for some infrastructure investment projects.
Retail sales rose 7.2% year-on-year in October, missing expected growth of 7.9% and matching the more than 16 year low hit in April.
Consumers have been hit with higher food prices over the past few months, as pork and other meat prices soared.
At the same time, consumers have been reluctant to make big purchases with auto sales falling for the 16th straight month in October, data showed on Monday.
(Writing by Stella Qiu; Editing by Sam Holmes)
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