The economic situation in Germany in February 2016
- The German economy is experiencing moderate growth, but the more fragile global economic environment is having an impact.
- Industrial activity softened in the second half of 2015. However, the volume of new orders is indicative of a slight recovery.
- The situation in the services sector, which is more oriented towards domestic demand, is continuing to point upwards
- The labour market is still developing positively.
The German economy is experiencing moderate growth. In the final quarter of 2015, GDP rose by 0.3% in price-, calendar- and seasonally adjusted terms. This confirmed the January reports of a solid GDP increase of 1.7% in real terms last year. The upward forces are continuing to prevail in the German economy, even though the signals from the outside economic environment have been mixed for some months now. Industrial output in December 2015 was well down on the month before. New orders also slackened slightly in December, but in the final quarter as a whole they were markedly better than in the third quarter. The turbulence on the international financial markets at the beginning of the year - triggered not least by the low oil price and the uncertainty about future developments in China - resulted in a darker mood amongst German firms. Business expectations declined considerably in January. The assessment of the current situation remains at a high level, but has weakened slightly since December. Construction output picked up quite a lot of speed in the final quarter of 2015. The improvement is likely to continue in the next few months, particularly in the field of housing construction. Judging by the ongoing rise in employment, the situation in the services sector, which is more oriented towards domestic demand, is continuing to point clearly upwards. The favourable development on the labour market and solid increases in income are causing the purchasing power of private households to increase further. The high influx of refugees is also stimulating demand, albeit to a limited extent.
The global economy is continuing to display moderate dynamism. A slight acceleration can be expected this year. This will mark a continuation of the flat development seen over recent years. The growth prospects of the United States and the Japanese economy are basically expected to be positive this year. The economic recovery is also likely to continue in the eurozone. In China, in contrast, growth is slowing. This is causing problems for China's trading partners, particularly in Asia. Raw-materials exporting countries like Russia and Brazil are still suffering from the low oil and commodity prices. Current cyclical indicators are not suggestive of a global economic recovery. For example, global industrial output shrank somewhat in November 2015, and the Markit Composite Purchasing Managers' Index also fell slightly in January. The recent rise in volatility on the capital markets also reflects the cyclical risks.
Despite the slower global economy, Germany's exporters sold goods worth almost ¤1,200 billion to other countries in 2015. There was a slight downwards trend in exports from mid-year on, mainly due to lower demand from the major emerging economies. Exports of goods were down by 1.6% in current prices in December, and by 1.5% for the fourth quarter as a whole. In December, nominal imports of goods dropped by 1.6%. The trade surplus in 2015 as a whole of nearly ¤250 billion is much higher than that of the year before, primarily due to cheaper oil imports.
The goods-producing sector had yet to emerge from its period of weakness at the end of the year. Output dropped again in December compared with the preceding month. This meant that the final quarter as a whole registered a decline. The reason for this is falling industrial output (-0.9%) and energy generation (-2.9%) figures. Only the construction sector (+1.2%) recorded an increase. Within industry, production of capital goods and consumer goods fell. The manufacturers of intermediate goods were able to expand their output slightly. Despite a slight fall in December, new industrial orders followed the slow third quarter with a rise in the final quarter of the year (+1.0%). Demand was driven by the domestic market and the non-eurozone; orders from the eurozone decreased. The economic environment has also impacted negatively on the assessments of the current situation, but they do remain at a high level. The survey by the Association of German Chambers of Industry and Commerce also registered positive business sentiment. This and the slight recovery in new orders are indicative of a gradual improvement in industrial activity.
Consumer spending boosted Germany's economy again in the fourth quarter. Fundamental factors like the low inflationary pressures due to low oil prices and the positive employment and income prospects are having a positive effect on consumer spending. The latest indicators reveal a mixed picture. Following slight falls in autumn 2015, consumer sentiment has stabilised at a high level since November. The mood amongst retailers has worsened a little since September. Retail turnover (excluding vehicles) did not expand in the fourth quarter. In view of moderate rises in the price level and a dynamic development in jobs and incomes, the prospects for consumer spending therefore remain positive at the beginning of 2016.
The labour market situation remains positive. Employment continued to rise strongly in December by another 44,000 people after seasonal adjustment. Employment subject to social security contributions actually rose faster, according to the latest figures (November). Unemployment and underemployment rose by much less in January than is usual for the time of year. In seasonally adjusted terms, unemployment actually dropped by 20,000 people. Demand for labour continued to rise. The high influx of refugees is still only having a limited impact on the labour market.
A detailed report and commentary on the overall situation and trends in the German economy will be published in the March edition of the monthly report, Schlaglichter der Wirtschaftspolitik ("Economic policy highlights", in German only). This report is expected to be available on the website of the Federal Ministry for Economic Affairs and Energy in the course of the 9th week of 2016.
 Preliminary data on GDP development in the fourth quarter of 2015 issued by the Federal Statistical Office on 12 February 2016.
 The report is based on statistical data that were available as of 12 February 2016.
 Unless stated otherwise, these are rates of change against the respective preceding period on the basis of price-adjusted figures which have also been adjusted in line with the Census X-12-ARIMA procedure for calendar-day and seasonal variations.