The German economy has been back on track since the beginning of the second half of 2013.Third-quarter GDP increased by 0.3 percent over the previous quarter after inflation, seasonal and calendar adjustments. Economic output grew much more vigorously in the second quarter, improving by 0.7 percent, but this performance was affected by catching-up processes brought on by the slow start early in the year. In year-on-year terms, third-quarter growth was up by 1.1 percent in 2013. Investment was the main driver of expansion, rising by a total of three percent quarter on quarter. Consumer spending, which increased by 0.2 percent, was not quite as strong as in the previous quarter. Meanwhile, government spending was up by 0.5 percent, significantly outpacing private consumption (just 0.1 percent higher).
Having made a positive contribution to economic activity in the second quarter, the trade balanceacted more as a drag on growth in recent months. German exports remained broadly unchanged, while imports rose by 0.8 percent, resulting in a negative growth contribution of 0.4 percentage points to the trade balance. Exports were particularly affected by the weak demand for German goods in France, Italy and Spain resulting from the underlying economic conditions in these countries, and by reduced imports by Turkey. Increased exports to the US, the UK, China and Japan could not compensate for falling exports to southern Europe. On the import side, German demand for goods from France, Spain, the Netherlands, Italy and the UK dropped significantly. On the other hand, there was a disproportionate rise in imports from Russia and China. However, the latest data show that German exports are on an upward trend. Exports rose month on month from August to November 2013, after calendar and seasonal adjustments. Nonetheless, the previous year’s level of exports was not fully achieved. Exports from January to November decreased overall by 0.5 percent compared with the same period last year. German imports have not displayed a clear trend of late. Imports in November 2013 were down by 1.1 percent, month on month, after calendar and seasonal adjustments, following a three percent uptick in October. Imports from January to November 2013 fell overall by 1.3 percent compared with the same period last year.
Preliminary calculations by the Federal Statistical Office show German GDP rising by 0.4 percent year on year in 2013. When adjusted for calendar effects, this equates to GDP growth of 0.5 percent. These data suggest that the German economy continued on track in the fourth quarter and will begin the year with a statistical overhang of around 0.5 percent. The sole boost to GDP growth in 2013 came from domestic consumption. Overall, foreign trade and investment acted as a drag on growth.
Developments on the German labour market were extremely healthy once again in 2013. Preliminary figures for 2013 from the Federal Statistical Office show that employment increased by 233,000, or 0.6 percent, to 41.8 million, the highest level since German reunification. This improvement was mainly driven by a rise in the number of employees paying into the social security system. Preliminary data reveal that this figure grew within a year by 359,000, or 1.2 percent, to 29.83 million in October 2013 (latest available data). Full and part-time positions increased by 152,000 and 208,000 respectively in a year-on-year comparison. Nearly every sector posted employment gains. Business services (excluding temporary positions), and healthcare and social services, were the industries with the strongest absolute employment growth, while the temporary work sector experienced a notable decline in job numbers.
Unemployment stood at 2.87 million in December 2013, up 67,000 from November and 33,000 higher than a year ago; however, after seasonal adjustments, unemployment was 15,000 lower than it was in November. The unemployment rate in December remained unchanged at 6.7 percent compared with the same month a year ago. On average, some 2.95 million people were unemployed in 2013, which corresponds to an annual average unemployment rate of 6.9 percent. The fact that the growth in the number of employees paying into the social security system failed to correlate with the unemployment results can be attributed to an increased propensity of women to take up employment and to a rise in the number of working-age persons as a result of immigration from the EU’s crisis-hit and candidate countries. In addition, unemployed persons often lacked the qualifications required for the available jobs. The Institute for Employment Research expects the labour market to continue developing in a positive direction on account of the economic upswing. Immigration and rising labour market participation will largely determine the increase in the potential labour force. However, unemployment will only decline marginally in 2014 due to unemployed persons having insufficient or wrong qualifications.
Source: BDI The Voice of German Industry
