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German orders cheer - but not everyone

Friday, December 05, 2014 - 02:12

Latest German industrial orders are far stronger than expected and the Bundesbank - 'though slashing its growth forecasts - sees signs the current weakness will be overcome. Katie Gregory asks whether there's reason to be cheerful about Europe, for a change.

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Lufthansa strikes in Germany... getting Europe off the ground is still a struggle. With industry remaining volatile across the euro zone, a rise in household spending did the heavy lifting for GDP this quarter. Latest data confirmed growth at 0.2 percent in the third quarter. It may still be weak ... but it's not getting any worse. And there are also positive signs for the zone's two largest economies. Germany grew 0.1 percent and France accelerated to 0.3 percent growth. Robert Kuenzel from Daiwa Capital Markets remains cautious. SOUNDBITE (English) ROBERT KUENZEL, DIRECTOR, EURO AREA ECONOMIC RESEARCH, DAIWA CAPITAL MARKETS EUROPE SAYING: "Now 0.2 percent quarter on quarter was slightly better than we probably would have thought one or two months ago, but doesn't mark a surprise as such." But while many are looking to the positives in fresh data out of the euro zone - for example German industry orders rising far more than forecast in October. The GDP figures show countries are still faltering... Italy and Austria declining further. That's leading some analysts to remain bearish going into next quarter. SOUNDBITE (English) ROBERT KUENZEL, DIRECTOR, EURO AREA ECONOMIC RESEARCH, DAIWA CAPITAL MARKETS EUROPE; SAYING: "Our expectation is for the 0.2 percent quarter on quarter to not be repeated in Q4, we would see probably something around 0.1 as a more likely outcome." Another likely outcome: the ECB this week putting off further easing measures until next year. And now Germany's central bank, Bundesbank, has issued it's strongest warning yet against adopting U.S.-style bond buying. Saying it won't work and will lead other countries to renege on their economic reforms. But Bank Of New York Mellon's chief currency strategist, Simon Derrick, is confident Quantitative Easing will take place - though it's not plain sailing. SOUNDBITE (English) SIMON DERRICK, CHIEF CURRENCY STRATEGIST, BANK OF NEW YORK MELLON, SAYING: "The problem is as always we're not simply talking about one country or one country's central bank making a decision we're talking about a whole group of country's, and therefore it is far harder for the ECB to make quick effective decisions than it is for the Bank of England, the Bank of Japan or for the Federal Reserve." Reasons to be more cheerful? Perhaps not quite yet.

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German orders cheer - but not everyone

Friday, December 05, 2014 - 02:12