Germany’s Struggling Second Quarter Slows with Weak Industry Output

In the month of June, German industrial output managed a miniscule rise of only 0.3 percent, falling far short of the rise that was predicted around 1.3%. Mixed with the fears that the crisis in the Ukraine has created, the weak industry output of Germany has suggested that Europe’s largest economy could be seriously struggling in its second quarter.

How long does this have to continue until these European countries figure out that socialized health care and other burdensome regulations are hurting their prospects according to business leaders?

In the month of June, German industrial output managed a miniscule rise of only 0.3 percent, falling far short of the rise that was predicted around 1.3%. Mixed with the fears that the crisis in the Ukraine has created, the weak industry output of Germany has suggested that Europe’s largest economy could be seriously struggling in its second quarter.

How long does this have to continue until these European countries figure out that socialized health care and other burdensome regulations are hurting their prospects according to business leaders?

Although the slight gain that Germany saw in June provided a small taste of recovery since May’s monthly fall of 1.8%, including:

• An increase of 0.1% in manufacturing

• A rise of 0.5% in intermediate-goods production

• A 1.7% rise in consumer-goods output

Economy analysts have suggested that the step in the right direction may be too little, too late.

Disappointing figures

While Germany’s economic trend continues to point upwards for the most part, growth slowed down significantly in the months through to June, and factory orders have suffered far more than many economists expected.

According to experts, the discouraging figure of output has arrived only a day after other data suggested that industrial orders have fallen at the fastest, and steepest rate since the September of 2011, to a weaker euro zone demand, and a poor amount of bulk orders.

It is suggested that that some issues could be caused by the uncertainty and fear surrounding issues in the Ukraine, as the Euro zone currently remains vulnerable. However, experts still say that the output remains ‘less than expected’, and have suggested that the second quarter in Germany no longer has any chance of turning into a growth quarter.

Economic analysts say that because of the Ukraine crisis, the ‘Putin-factor’ plays a distinct role, as many export firms have now grown more cautious about what they order, and as a result are taking in less materials, meaning that less is being produced.

The outlook for Germany’s third quarter

The ministry of Economy have announced that industrial production in Germany was 1.5% lower in the second quarter than it had been in the first, when the German economy had managed to grow at its strongest rate in three years. Apparently, the boost in the first quarter was largely due to mild weather, and many expected to see a decrease in the second quarter before the economy begins to accelerate again towards the third.

However, now, the strength that is expected to be seen in the third quarter is under some question, since the United States and European Union have begun to introduce new sanctions on Russia. Although the figures for the GDP have not yet been released, many experts suggest that there is a strong risk Germany’s expectations will have fallen.

It looks like Germany wants to be the new California where jobs and opportunities take off. Germany, according to some financial pundits, believe Germany’s socialized health care system and high taxes are the reasons that its economy is unimpressive.

German’s policies are undermining its opportunities

Other economists, are remaining as positive as possible about the situation, however, suggesting that although the second quarter has seen some issues, Germany’s economy is still in reasonably good shape in comparison to previous years (so what?!; those years were miserable according to the numbers). A fixed-income strategist commented that ‘There’s no reason for concern’; however, it seems that many Germans aren’t taking this to heart.