BERLIN: The German economy had a good start to the second quarter and indicators point to the upturn continuing, despite surveys showing the mood among companies and investors has deteriorated, the finance ministry said.
Growth in Europe’s largest economy slowed to 0.3 percent in the first quarter as foreign trade dragged. Latest data showed orders, output, exports and retail sales all rising, though private sector growth has slowed.
Overall, indicators suggest the economic upturn will continue in the second quarter of 2015 at a moderate pace,” the ministry said in its monthly report.
It said industry, in particular, had started the April-June period on a strong footing, adding that fuller order books pointed to a “marked expansion” in the sector in the coming months.
But some indicators have been more downbeat of late. In May business morale weakened slightly and in June investor sentiment slipped.
The latest situation indicators from May and the second decrease in Ifo business expectations in the manufacturing sector signal that the industrial upturn is unlikely to be very spirited,” the ministry said.
It said private consumption, a key growth driver in early 2015, would likely continue to rise – albeit at more moderate pace – thanks to higher employment and low inflation, which boosts purchasing power, though the stimulative effect from low oil prices might have decreased somewhat.
The construction sector looks set to experience an “accelerated upswing” in the second quarter, the ministry said.
It said consumer price inflation was likely to remain moderate as energy prices continue to be lower when compared with the same time last year, though import prices for non-energy products had increased.
The dampening effect of the oil price in year-on-year comparisons will likely only peter out at the end of the year, though.”
German tax revenues rose by 13.6 percent in March to 45 billion euros, largely due to a one-off effect, the ministry said.
