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Domestic Demand Propels German Economy

By:
Peter Taberner
Updated: May 24, 2016, 13:40 UTC

The German Federal Statistical Office has released details of the latest GDP results in Germany, further confirming that Europe’s most powerful economy

German Economy Grows

The German Federal Statistical Office has released details of the latest GDP results in Germany, further confirming that Europe’s most powerful economy grew at 0.7% for the first quarter this year.
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Domestic demand was the main driver of economic progress, particularly in net additions in capital stock including machinery equipment and  buildings, which rose by 1.9% in comparison with the final quarter of 2015.

Gross additions of capital stock increased in the construction industry by 2.3%, with this year’s relatively mild winter as one of the main reasons why.

Final consumption expenditure of households rose by 0.4% and government final consumption expenditure increased by 0.5% on the previous quarter.

Exports also increased, as goods and services that travelled rose by 1% quarter on quarter.

Although the amount of imports grew at a faster pace of 1.4%, leaving the balance of payments having a negative net effect on growth by an estimated minus 0.1%.

Year on year, there was also a rise in GDP, climbing by 1.6% from the first quarter of 2015.

Although the pace of growth slightly eased from the year on year figures for the last quarter of last year, which rose by 2.1%.

There was also a quarterly increase of 533,000 in employment figures, overall labour productivity, which is calculated as price-adjusted gross domestic product per hour, was up 1.1% on the previous year.

On the production side of GDP, price-adjusted gross value added, or measure of the amount of goods and services produced at the beginning of 2016, was higher than a year earlier in all economic sectors, overall by 1%.

The highest growth rates were found in financial and insurance activities, which rose by 2.5%, and for information and communication services by 2.3%.

French Business Climate Mostly Stable

Official estimates have found that the business climate across many sectors in France is secure at the moment.

According to the business managers who took part in the survey, the manufacturing industry is on a stable path at the moment.

In May, the composite index lost one point, falling to 104, but still comfortably remained over the long term average of 100.

The wholesale trade sector has posted more positive results, where May’s index feedback found that the survey had increased by one point from March.

Now standing at 101 in the index score, the sector still remained higher than the long term average of 100 since September last year.

Business leaders in the construction industry, have said that trade  has recovered in the last month, but remains below the long term average influence in the French economy.

The all important services industry has returned to its long term average score, as sector figures believe that business is improving.

The survey revealed that the general outlook is improving, and there were huge strides forward in the expectancy over levels of demand and activity.

There is also a very positive outlook on the future levels of employment in the industry, with many anticipating employing more staff.

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