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German Industrial Production surprises to the upside in July - ING

FXStreet (Łódź) - Carsten Brzeski from ING believes that the positive German Industrial Production numbers for July, showing a 1.9% increase month-on-month and a 2.5% rise year-on-year, suggest that the country will return to growth in the third quarter of the year.

Key quotes

"The composition of second quarter growth sent two opposing signals for the German economy’s prospects: the sharp drop in the construction sector should have been a weather-driven one-off and should be reversed in the third quarter."

"The inventory build-up seen in the second quarter, however, was less encouraging for activity in the third quarter."

"Underneath these mixed signals, there are still solid fundamentals, particularly in the domestic part of the economy."

"Trying to look ahead, not everything is hunky dory, yet, and one good month does not make a strong quarter."

"Particularly, the inventory build-up in the second quarter as well as increased uncertainty from geopolitical risks should not be underestimated."

"Still, this week’s industrial data encourage our view that the contraction in the second quarter was rather a one-off than the start of a trend downturn."

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