German growth picks up as weak euro helps exports

German economic growth accelerated in the second quarter of 2015 but by less than expected, with foreign trade acting as a support and domestic investment braking growth, the Federal Statistics Office said on Friday.

The economy grew by 0.4 per cent in the quarter between April and June after expanding by 0.3 per cent in the first three months of 2015. The consensus forecast for the second quarter in a Reuters poll was for 0.5 per cent growth.

Unadjusted data showed the economy expanded by 1.6 per cent on the year in the second quarter, surpassing the Reuters consensus forecast for 1.5 per cent growth.

“Supported by the weak euro, exports rose much more strongly than imports according to preliminary calculations,” the Statistics Office said in a statement.

Business confidence improved in July after two monthly drops as an agreement between Greece and its creditors for talks on a third bailout lifted the mood at firms.

Around half of Germany’s 30 blue-chip companies reported consensus-beating financial results for the April-June period. More than two thirds nonetheless stuck with their guidance for the year as a whole as geopolitical and economic uncertainties remain for the second half of the year.

In positive news for the economic outlook, figures released last week showed industrial orders recorded their biggest gain since early 2011 in the April-June period thanks mainly to strong foreign demand.

"While the euro zone economy seems to see some signs of rebalancing, with the stagnation in France and strong growth numbers from Spain and Greece, Germany remains an almost boring beacon of reliability," ING economist Carsten Brzeski said.

However, Germany’s heavy foreign trade exposure may turn from a strength to a risk given the angst about the global outlook.

The mood among analysts and investors in Germany worsened in August due to concerns about the effect of an unstable global economic backdrop on the country’s export-dependent economy, a survey showed on Tuesday.

Some German industrial companies have made upbeat earnings announcements. Tyre maker Continental this month raised its full-year profit outlook after quarterly earnings jumped more than expected on a strengthening European car market.

Reuters