German economy stagnates as eurozone growth hits seven-year low - business live
Rolling coverage of the latest economic and financial news, including the latest eurozone growth figures
- Latest: Eurozone growth weakens to 0.1%
- Table: How Germany compare with UK, US....
- Breaking: German GDP flatlined in October-December
- German economy only grew 0.6% in 2019
- ING: Germany at risk of recession
4.46pm GMT
Finally, the UK's FTSE 100 has closed down 0.6%, or 43 points, at 7,409.
Europe did better, despite today's unimpressive growth report. The Stoxx 690 has finished the day flat (rather like Germany's GDP...).
2.46pm GMT
The eurozone will probably struggle to grow in the current quarter, reckons Greg Daco of Oxford Economics.
He predicts that the mere 0.1% growth reported in October-December will be repeated in January-March, with coronavirus restrictions hurting the economy.
Flat German #GDP in Q4 constrained Eurozone to meager 0.1% advance.
> 2019: worst yr since 2013 for EZ
We expect the same pace of growth in Q1 as #coronavirus disruptions derail the nascent industrial recovery via @OxfordEconomics @atalaveraEcon @OliverRakau @jeffsparshott pic.twitter.com/C3Z3BQJRAO
2.43pm GMT
If you're just tuning in, here's the AFP newswire's take on today's German growth figures:
Europe's largest economy Germany marked time in the fourth quarter of 2019 as its export-oriented industry's woes continued to weigh on growth, official data showed Friday.
Gross domestic product (GDP) was flat quarter-on-quarter in October-December, federal statistics authority Destatis said, disappointing the agency's own expectations and those of analysts surveyed by Factset.
2.41pm GMT
Fancy some afternoon reading? Here's a fascinating thread from Sky News's Ed Conway about UK statistics, and how a mysterious gold transaction flattered Britain's trade data:
This is a story about a chart. A pretty astonishing chart. A chart that has all sorts of consequences, including misleading ministers, distorting our view on the nature of the UK economy and creating a genuine mystery about what's going on in the bowels of the UK economy
Here's the chart in question: exports of gold from the UK. For the vast majority of history they were near zero (average monthly level apt 126m). Then, suddenly, in the last two months of last year, gold exports were catapulted higher. It's a staggering chart pic.twitter.com/uQQmrko8bz
Just to put that spike into context, 12bn (what those two months of gold exports add up to) is the total annual output of a country like Jamaica. It is more than we typically export, over a two month period, to ANY single country, inc US or Germany (our biggest trading partners)
It has serious consequences. Since comparable records began in 1998, there hasn't been a single month where the UK was a net goods exporter. We've always had a deficit. In December, thanks to the 12bn gold exports, Britain recorded its first monthly trade surplus on record pic.twitter.com/iAJS7BxG4K
There's nothing new about gold distorting UK trade figs. You may recall a short @skynews film I made abt this some yrs ago. Since then @ONS has started trying to strip gold out of the figs. Indeed the gold chart above is a new series they've just published https://t.co/Vgd3ONcNZQ
However @ONS are bound by int regs to include gold in the headline numbers. That massively distorts them. After all UK = world hub for gold trading. Any movement/change of ownership of gold bars counts as imports/exports even tho it's hardly what anyone wld consider an "export"
You might've thought all of that wld mean our politicians wld think twice before boasting abt those dodgy headline trade figs. Not a bit of it. This wk @trussliz tweeted this about them: https://t.co/H5AqB9ezd3
Every bullet point in her tweet is wrong if you strip out gold exports:
UK biz exported 674bn of goods & services (not 689)
aA 2.9% increase on 2018 (lowest since 2016; not 5.0%)
We don't know how much exports to non-EU countries rose; @ONS hasn't worked them out ex-gold
It's not like exports are doing badly. They're at 30.4% of GDP once you strip out gold. That's one of the highest levels in decades, tho it is down on last yr. Perhaps that's why @trussliz used the dodgy headline numbers which look far better because of that 12bn of gold exports
But none of that solves the real mystery here. Why did gold exports spike so dramatically? One thesis doing the rounds is that it has something to do with this story: Poland repatriating some of the gold that's been in the @bankofengland's vaults since WW2 https://t.co/GmdJ43BJNI
But it's not that, because central bank gold movements (monetary gold) aren't included in these gold stats. Anyway all that Polish gold still wouldn't account for all the gold that changed hands in Nov/Dec. It's equivalent to Barbados's GDP, not Jamaica's
As far as I can divine here's the answer. A US bank with London gold vaults shifted some of that gold from being "unallocated" to being "allocated". Effectively it moved it on its balance sheet. The gold stayed in the same vault but technically it shifted from UK ownership to US
In other words, a couple of clicks in a bank's spreadsheet caused the biggest fluctuation in Britain's trade figures in modern history. At least that's the most plausible explanation. Tho it raises further questions: why? Is the bank in trouble? And who owns the gold anyway?
Short answer: we may never know. No other sector is as cloak and dagger as gold. What we do know is that crazy stuff is happening beneath Britain's national statistics and it's time we started paying attention to it. More on this in my @thetimes col today: https://t.co/XYyF1MuR4c
2.36pm GMT
The US stock market has opened gently, with the Dow Jones industrial average up 33 points or 0.1% at 29,456.
U.S. stocks open slightly higher https://t.co/vtsNBP70dY pic.twitter.com/wXQgEr1v1J
U.S. factory output fell in January on Boeing's production halt https://t.co/Dyisiy9Iov pic.twitter.com/inhC8HKY9E
2.02pm GMT
With stock markets at record highs, Universal Music wants to join the party with an IPO:
Related: Universal Music plans to list on stock market in next three years
2.01pm GMT
Here's our story about Tesco illegally blocking its rivals from opening stores:
Related: Tesco stopped rivals opening nearby stores, watchdog finds
1.52pm GMT
Wall Street is expected to post fresh gains today, despite the uncertainty created by Covid-19.
Mihir Kapadia, the CEO of Sun Global Investments, says:
"With the coronavirus death total now reaching 1,000 and looking likely to go much higher, Asian shares have nevertheless followed yesterday's Wall Street rally as factories begin to re-open across China.
Asia-Pacific shares outside Japan rose 0.9%, with Shanghai blue chips gathering momentum by reaching 0.8%. The Japanese Nikkei market was closed due to a public holiday. In Europe, stocks are also higher the FTSE up 0.7%.
US Opening Calls:#DOW 29480 +0.19%#SPX 3385 +0.29%#NASDAQ 9633 +0.38%#RUSSELL 1698 +0.31%#FANG 3746 +0.52%#IGOpeningCall
1.36pm GMT
For days, investors have been fluctuating between panicking about the coronavirus, and persuading themselves that the crisis is abating.
Today they're in a calm mood, pushing stocks in Europe up to new record highs.
Related: Channel 4 worker taken to hospital for coronavirus test
12.49pm GMT
Back in the UK, supermarket chain Tesco has been blasted by regulators for unlawfully blocking its rivals from opening stores.
It's unacceptable that Tesco had these unlawful restrictions in place for up to a decade. By making it harder for other supermarkets to open stores next to its branches, shoppers could have lost out.
In the future, we want the ability to fine businesses if we find that they are in breach of our orders. That's why we've called on the Government for more powers.
12.26pm GMT
Back in the debt crisis, some of Europe's smaller countries were the black sheep of the euro-flock. Today, these peripheral nations are driving growth, as France and Italy shrink and Germany stagnates.
Barret Kupelian, senior economist at PwC, says the periphery are the euro area's bright spot:
"Today's country breakdown of Eurozone's GDP growth showed us that the bloc grew by 1.2% in 2019. This rate of expansion is comparable to that of the UK. The US economy, however, grew by 2.3% in 2019, which is around double the rate of the Eurozone and the UK"
The Eurozone performance can be mainly explained by the poor performance of Germany and Italy, which are its biggest and third largest economies respectively. Size matters when it comes to GDP growth rates - a one percentage point increase in the growth rate of Germany and Italy increases Eurozone GDP by 0.5 percentage points."
"However, the bright spot in the Eurozone continues to lie in the peripheral economies. With the exception of Greece, all of the bailout economies have surpassed pre-crisis output levels and continue to grow at strong rates. In fact, we estimate that the three bailout economies (Spain, Portugal and Cyprus) which reported Q4 2019 output estimates today, grew by 0.6% quarter-on-quarter compared to virtually no growth in the German, French, Italian and Dutch economies in GDP weighted terms (see Figure below)."
11.51am GMT
Germany's economy is unlikely to improve much this year, due to trade tensions, the shift away from petrol and diesel cars, and Brexit.
So argues Ludovic Subran and Katharina Utermihl, top economists at German insurance giant Allianz. They warn in a new report that Europe's largest member risks a "stranded future", unless it can strengthen its economy and become more competitive.
The #German economy ended 2019 on a weak note & 2020 is unlikely to provide much relief. Worryingly this subdued performance may well provide a glimpse of what's in store if 's traditional growth engines of manufacturing & exports falter as it struggles with structural change. https://t.co/SbmILoInfv
11.07am GMT
Andrew Kenningham of Capital Economics has told clients:
"We think the economy will continue to flirt with recession in the first half of this year."
11.07am GMT
It's hard to put too much gloss on a stagnating economy, but the German government has tried to strike an optimistic-ish tone this morning.
Berlin's economy ministry says Germany's economy is going through a weak phase, but it's encouraged that business sentiment has improved.
10.58am GMT
More encouragingly, employment growth across the eurozone has risen.
The number of employed people rose by 0.3% in the euro area in the final quarter of 2019, and by 0.2% in the European Union. That's up from 0.1% in Q3.
10.23am GMT
At just 0.1%, the eurozone and the EU has both posted their weakest growth since early 2013 (when the debt crisis drove Europe into recession).
Although countries in the periphery grew quite strongly in the last quarter of 2019, weakness at Europe's largest economies was to blame.
10.08am GMT
Just in: The eurozone nearly stalled in the final quarter of 2019, dragged down by weakness in its three largest economies.
Statistics body Eurostat reports that the euro area and the wider European Union only grew by 0.1% in October-December. That's down from 0.3% growth across Europe in July-September
10.01am GMT
Paul Sommerville of Sommerville Advisory Markets points out that Germany's economy has been basically flat for nine months:
#German GDP numbers confirm no growth at all in last 9 months of 2019.
Germany on verge of recession ( again) and these numbers are all from BEFORE #coronavirus
9.34am GMT
European stock markets are subdued today, following Germany's underwhelming growth figures.
The Stoxx 600 index is flat, having dropped yesterday as traders fretted about a sharp leap in coronavirus cases.
9.05am GMT
Over in the City, shares in Royal Bank of Scotland have slumped 6% as new chief executive Alison Rose outlines her strategy alongside its latest financial results
This will be a significant challenge as we, like others, do not yet fully understand what this will require and how it will be achieved, not least as there is currently no standard industry methodology or approach. Solving this will require UK and international industry, regulators and experts to come together and find solutions. We are determined to not just play our part, but to lead on the collaboration and co-operation that is so critical to influencing the transition to a low carbon economy.
Related: RBS will stop lending to energy firms without climate crisis plan
8.29am GMT
The euro has dropped to its lowest level in over two and a half years, after this morning's German GDP figures.
The single currency has dipped to a1.0828, its weakest levels since May 2017, extending its recent losses.
8.15am GMT
The risk of a full-blown recession is hanging over Germany, says economist Carsten Brzeski of ING.
He fears that the Covid-19 outbreak will hurt Germany, although a pick-up in construction could cushion the blow.
Looking ahead, the latest soft indicators and industrial data for December do not bode well for the short-term outlook. Also, the impact from the coronavirus on the Chinese economy is likely to delay any rebound in the manufacturing sector as it at least temporarily disrupts supply chains.
However, despite these rather discouraging factors, there are several - partly technical - drivers which should soften any pessimism. The poor performance of the construction sector in the fourth quarter was mainly driven by the Christmas break. With mild winter weather, a rebound in the first quarter looks likely. Also, changes in the inventory cycle could support growth in the short run.
Some weeks ago, we had started to investigate which form the recovery could take from the alphabet soup of options. Will it be a 'V' for a strong rebound, a 'U' for a longer bottom followed by a strong rebound, a 'J' for a longer period of stagnation followed by a weak rebound, an 'L' for a long period of stagnation or even a 'W' for a double dip recession? Today's data shows that the alphabet soup has been taken off the menu for the time being.
Stagnation, with a risk of a technical recession, currently looks like the only dish served.
There's no end in sight to Germany's stagnation, says @carstenbrzeskihttps://t.co/c0DMAzrOnH
7.58am GMT
Stagnation is bad, but there's some relief that Germany didn't do even worse.
Oliver Rakau of Oxford Economics feared German GDP could actually have contracted in the last quarter, given recent weak data:
Phew! German GDP stagnated in Q4. That was slightly below Consensus, but monthly hard data would have suggested something much worse. At the margin a slight relief. Now waiting for @destatis_news to provide some commentary as regards the composition.
Friday cheer from Germany. Yes, GDP growth is zero, but at least it wasn't contraction. And Q3 growth revised up to 0.2%. That's worthy of a `woo hoo!' given some fears for what today might bring. pic.twitter.com/j5t8pEpND0
[EUR] Germany's latest economic figures (GDP) are not particularly shocking, yet the country's domestic economy remains the Achilles' heel of Europe. Taking into account the impending impact of the virus, concerns are still perfectly justified.
7.45am GMT
2019 was not a great year for Germany.
Today's GDP report shows that the economy grew by 0.5% in January-March, only to shrink by 0.2% in April-June. Growth picked up by 0.2% in July-September, before fizzling out in the last quarter.
7.20am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial market, the eurozone and business.
Newsflash: Germany's economy is flatlining, as a slowdown in spending and exports wipes out growth.
Ouch! German economy stagnated in the fourth quarter. German 4Q GDP Adj 0.0% QoQ. pic.twitter.com/oo5CXFxnvH
After a very strong third quarter, the final consumption expenditure of both households and government slowed down markedly. Trends diverged for fixed capital formation.
While gross fixed capital formation in machinery and equipment was down considerably compared to the third quarter, fixed capital formation in construction and other fixed assets continued to increase.
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