German economy dips into red as EU manufacturing disappoints

German economy dips into red as EU manufacturing disappoints
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Europe’s biggest economy may be running out of steam with the news that German GDP contracted in Q2 for the first time in a year, and to general surprise.

The results mirror similar Q2 performances in France and Italy, the eurozone’s second and third largest economies. Unusually the blame cannot be laid at the feet of the traditionally thrifty German consumer
as domestic consumption and spending stood up well; it was in terms of investments and export sales that Germany fared badly.

Confidence in the short-term future is low, and the reason goes beyond business.

“We are seeing a battle: geopolitics versus monetary policies. The 
geopolitics are explosive because they concern the German and
European economies. Yet Europe wants to decide on sanctions 
against Russia later this week,” says Baader Bank’s Robert Halver.

Another damning Eurozone statistic is manufacturing output, and the Purchasing Manager’s index fell to 50.7, its lowest in a year. Of particular concern is the decline in French manufacturing activity, down at its fastest pace in 15 months.

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