German Industrial Production Drops in August
The takeaway: German industry weakens despite improving on projection –> Germany at center of Eurozone crisis -> market subdued, US job data to come soon
German industrial production data came in better than expected today, shrinking by one percentage point this past August versus the predicted two percent drop from the previous month. On the annual front, the 7.7% released today edged out the predicted 6.4%. However, any positive sentiment caused by the slight improvements from the projections were likely offset by comments from the German economy ministry in an emailed statement which warned of further weakening in the German production dynamic.
The drop today was expected coming off the particularly strong month of July, during which industrial production in Germany grew 3.9%. However, the low numbers underscore the weakness of the beleaguered Eurozone economy given the possibility of a credit breakdown should Greece default on loans. A breakdown of the industrial production data today shows individual drops in all categories including construction, energy production, and consumer goods production. German PMI manufacturing numbers released earlier this week hit a two-year low, and analysts have blamed low German manufacturing numbers on reductions in exports and domestic demand.
The market reaction to the German numbers was relatively muted as market participants wait for the release of the US employment numbers, a significant economic release that might send ripples through many other currencies.
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