German Growth Slowing?

Bloomberg Today:

German Economy Probably Grew 0.4% in Second Quarter, DIW Says


German economic growth probably slowed in the second quarter, the Berlin-based DIW institute said, as construction spending declines.

Gross domestic product in Europe's largest economy probably expanded 0.4 percent between April and June after growing 0.5 percent in the first quarter, the DIW said in an e-mailed statement.

``This does not yet signal a termination of the current upswing,'' DIW economist Stefan Kooths said in the statement. ``Overly optimistic economic expectations are being damped.''

German industrial production rose the most in six months in May while factor orders expanded more than forecast that month, according to the Economy Ministry. Still, German business confidence fell more than projected in June and investor optimism unexpectedly declined.

The DIW, formerly one of the five state-funded institutes that prepare twice-yearly joint reports for the government, cut its projection for second-quarter growth to 0.4 percent from 0.6 percent on June 11. The Federal Statistics Office will publish new GDP data on Aug. 14.

The decline in construction ``has intensified'' with benefits from companies' growing investments confined to commercial builders. Second-quarter growth in the services sector may stay ``slightly below'' levels posted between January and March, the DIW said.

``The construction industry is again threatening to fall behind'' the rest of the economy, DIW president Klaus Zimmermann said in the statement, without giving further details