The German economy — the workhorse of European growth since the financial crisis — has rediscovered its mojo.
Following a recent report of rising industrial orders and output, the next thunderbolt came on Monday: For the first time in history, German exporters sold more than €100 billion ($130 billion) worth of goods abroad in a single month.
The export total for July — €101 billion — set a record but even after accounting for seasonal effects, Germany set an adjusted record for a single month of €98.2 billion. Exports rose in adjusted terms by 4.7 percent from June.
At the same time, imports dipped by 1.8 percent from the previous month.
In light of the strong start to the third quarter, fears of a slowdown subsided. The statistics show that exports to the United States have more than offset losses to crisis-torn Ukraine and eastern Europe.
“Any loss in exports to geopolitical crisis regions, especially to Russia and Ukraine, were overcompensated by strong export of goods to other export markets,” said Johannes Mayr of German bank BayernLB.
In the second quarter, Germany’s gross domestic product fell by 0.2 percent. The main reason was the let down after a surprisingly strong first quarter, when economic growth was boosted by the unusually mild winter.
In July, exports grew to all of the largest economic regions. In the euro zone, they rose by 6.2 percent, in the rest of the European Union, exports rose 15.9 percent. In non-E.U. countries, exports rose 7.2 percent.
“Any loss in exports to geopolitical crisis regions, especially to Russia and Ukraine, were overcompensated by strong export of goods to other export markets,” said Mayr of bank BayernLB. Most of all, rising U.S. demand played an important role.
Holger Schmieding, an analyst at Berenberg Bank, remained cautious.
In the state of Lower Saxony, the summer holidays came especially late this year, which meant that workers spent the entire month of July working at Volkswagen, the largest car manufacturer in Europe. He said it is likely that there will be a counter reaction in industrial output and exports in August.
The financial sector narrowly remains the most optimistic sector of the economy. But other branches are also bullish.
Still, the German labor market would seem to be the best guarantor of the country’s solid economy.
“German employers will continue to hire … new employees” in the fourth quarter of 2014, according to the human resource consultant Manpower, in a Labor Market Barometer report reviewed by Handelsblatt.
Nine percent of German companies surveyed by Manpower said they assumed they will make new hires between October and December. Only 4 percent predicted they would have to let people go.
“Even though political crises such as the Russia-Ukraine conflict are weighing on sentiment, the companies expect that they will require more skilled labor,” Herwarth Brune, the head of Manpower-Germany, said. “The economy has proven to be stable in recent years, and German consumer sentiment is unbroken.”
The financial sector narrowly remains the most optimistic sector in the German economy. But other branches are also bullish. Manufacturing and construction firms are planning to hire. Employers in retail and gastronomy and in public and social services are more hesitant.
The labor market has not been entirely unaffected by the economic downtown.
Employment in the second quarter rose slightly by 0.2 percent over the previous quarter.
But the number of hours worked shrank slightly in comparison with the first quarter in seasonally adjusted terms by 0.1 percent. The hours worked per employed person fell in the second quarter in seasonally adjusted terms by 0.4 percent, according to calculations by the Institute for Employment Research.
This article was translated by Mary Beth Warner. To contact the author: Schrinner@handelsblatt.com