NEWS Release - German economy at the end of 2016: upswing continues
The German economy continued to pick up in the fourth quarter of 2016 after a brief setback last summer, according to the February issue of the Monthly Report. Data from the Federal Statistical Office indicate that real gross domestic product (GDP) increased by 0.4% on the quarter at the end of the year. GDP had risen by just 0.1% in summer.
In 2016 as a whole, real GDP grew by 1.8% in calendar-adjusted terms. "Thus, the upswing in the German economy with growth rates significantly above the rate of potential growth has been persisting for three years now and overall capacity utilisation is now exceeding normal levels," the Bundesbank economists report.
The report states that consumer prices rose significantly in the final quarter of 2016, climbing by 0.5% on the quarter after seasonal adjustment, following an inflation rate of just 0.3% in summer. It notes that consumers had to pay considerably more in the past few months for energy and food, in particular. However, average consumer price inflation for the year barely rose, increasing by 0.4% in total.
Unemployment down further, despite strong influx of refugees
According to the Monthly Report, the labour market situation improved again somewhat in autumn 2016, with employment once more on the rise after a slight dip in summer. The Bundesbank economists’ assessment of the outlook for employment remains favourable, but they write that it is becoming increasingly clear that filling vacant positions will pose more of a challenge. One possible reason they posit for this is the demographically-induced decline in the potential domestic labour force, which can no longer be fully offset by greater labour market participation.
Unemployment reportedly fell significantly in the final quarter of 2016, despite the high number of refugees registering as job seekers after their applications for asylum had been approved in the past few months; in December 2016, the figure was 6%. According to the Bundesbank economists, leading indicators signal that the labour market is likely to remain upbeat in the coming months, too.
As for the German economy as a whole, the Bundesbank experts also take an optimistic view of the first quarter of 2017 and are anticipating a further expansion in growth. They particularly see industrial activity as a major source of impetus. The favourable situation in the construction sector and the labour market along with the continued positive consumer sentiment were reportedly also contributory factors in this regard, although the rising energy prices could have a dampening effect on private consumption.
page source http://www.bundesbank.de/
