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Germany rebounds, but ECB hints at more stimulus

Friday, October 07, 2016 - 01:51

German industrial production numbers point to a rebound in an economy many saw as slowing, while Spain's industrial output jumps to an 8-month high. But, as Hayley Platt reports, the ECB is giving renewed hints that more monetary stimulus is in the pipeline.

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Germany's economy had been showing signs of slowing in July. But the latest industrial production figures show it's still Europe's powerhouse. It jumped 2.5 percent in August - far more than expected and its biggest monthly increase since January. It follows another strong set of industrial orders on Thursday. Construction was the only sector to post a fall. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "I think the German economy has constituent residual strength and I think that is going to be maintained through the medium run. I guess the question is to whether that strength will be sufficient in order to engender a re-election for Angela Merkel and that of course is an increasingly moot point and certainly more than it would have been 12-18 months ago." That's next year - and Merkel has been tempting voters with the promise of a 6 billion euro tax cut. Sigmar Gabriel - the country's Economy minister- would prefer Germany to invest rather than spend. He says state spending on migrants, lower oil prices and the weak euro will help grow the economy. And he's raised the 2016 forecast by 1 point to 1.8 percent - its strongest rate in half a decade. Elsewhere in Spain the data was equally encouraging. Industrial output jumping to an 8-month high. Easing fears over Europe's slowing economy. But earlier reports of the ECB perhaps winding down stimulus seem unfounded - for now at least. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "I think bond buying will continue but it may be the case the ECB will think about some degree of tapering over the course of the next 12 - 18 months." And the ECB this week putting out a different message - its chief Mario Draghi telling the IMF meeting in Washington the ECB intends to push on with aggressive monetary stimulus for as long as necessary.

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Germany rebounds, but ECB hints at more stimulus

Friday, October 07, 2016 - 01:51