German Economy Falters

11 July 2002

The German economy continues to show few signs of healthy recovery, with several new figures providing fresh cause for pessimism.

First of all, industrial output slipped 1.3% in May – a sharper fall than expected – as German industry was hit by the first engineering strikes for seven years.

The government claimed the decline was a one-off, predicting that the economy will improve later in the year.

However, the Federal Labour Office was less optimistic about unemployment, which rose 39,000 in June to 4.092m and is not expected to fall significantly for the rest of the year.

Despite such gloom, analysts and investors surveyed for the ZEW institute’s economic sentiment indicator remained positive. Although the barometer slipped by 0.5 points in July to 69.1, ZEW described this as slight given the recent stock market decline.

The indicator, which tracks the economy’s prospects in six months’ time, rose sharply early this year, suggesting an increase in industrial production in the second half.

Data sourced from: multiple sources; additional content by WARC staff