German Economy Confirmed to Have Grown Slightly in Q2
THE TAKEAWAY: German economy confirmed to have grown 0.3% in Q2 -> Exports contribute to economic growth -> Euro continues to trade at monthly high
German economic growth in the second quarter was confirmed at 0.3% (seasonally adjusted), confirming an initial estimate released last week. Annual gross domestic product growth was also confirmed at 0.5%, the slowest annual growth rate in 10 quarters, according to the Federal Statistics Office. The low annual growth is partially due to one less calendar day in Q2 2012.
Exports contributed to the economic growth, exports were up 2.5% in the second quarter, while import growth slowed to 2.1%. Private consumption grew 0.4% in the second quarter and government spending was up 0.2%, but the total domestic demand was still 0.1% lower.
About 41.6 million people were employed domestically in the second quarter according to the release; that’s 1.3% more than 2Q of 2011.
The Eurozone debt crisis has weighed on German economic growth as exports to other members of the currency bloc dried up while fiscal policy focused on debt reduction and regional stability. There have been numerous recent reports of the ECB considering a plan to cap Spanish and Italian yields, as a measure to help fix the debt crisis. German Chancellor Angela Merkel has voiced support of such an action, and tomorrow she will meet with Greek Prime Minister Antonis Samaras to discuss Greece’s bailout needs and a possible extension of the country’s budget targets.
The Euro did not significantly react to the as estimated German GDP results. EURUSD rallied yesterday above 1.2500 and a 3-month descending trend line, thereby setting a new monthly high, following the release of the FOMC minutes, which indicated that the committee members are considering another round of quantitative easing. A 2-year descending trend line could provide resistance around 1.2660.
EURUSD 15-minute: August 23, 2012
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