Some are all dizzy from running around, screaming that the apocalypse is here (ok,ok I get it - that's their job, and I love them for it), and I thought that the numbers on industrial production released to day were largely boring and what was to be xpected. Last Friday's, German domestic investment new orders were worrying . I had written about that in my rant about incompetent central bankers unwilling to do what they are paid for due to dogmatic reasons. Investment is what is keeping Germany competative not unit labor costs, as some claim.
have written a few months ago that one can largely forget about X12-arima and should focus on BV4.1 trend, when looking at new orders. Of course this also goes for industrial production. The news should have been today: industrial production largely unchanged. German
The details are a horror-story. Exports to the euro-zone, where 40% of Germany's exports are sent, fell by a stunning 9.6% (while exports to the rest of the world dropped 1.6%).
Right. Actually that kinda was the point of the whole internal deleveraging exercise in Southern Europe, more still it actually began years ago but accelerated in the beginning of the year. (see here). Of course it should not be accepted at all, that Germany is still seen as the European powerhouse. That nonsense hasn't been true since 2011 when the great industrial stagnation in Germany began. (Graph only with April numbers)
Germany is becoming more and more dependent on exports (falling in May though) and the lacking investment means that we will be less and less competative. So of course ZH is right in the end, every month of stagnation is abysmal. But we should not use a single month of worse than usual data to pretend that the world is ending, that would be just as bad as all the others telling us that a single seemingly positive month is a great sign of improvement.