German production up 2.6% in May, but Europe output set to slow

08 July 2010 17:06  [Source: ICIS news]

TORONTO (ICIS news)--Germany’s overall production rose 2.6% in May from April, after a revised 1.2% increase in April from March, but European production growth will likely slow down in the second half of the year, the country's economics ministry and an economic institute said on Thursday.

Germany's Ministry of Economics and Technology said that industrial production in May, which increased by 3.4%, was the primary driver of overall output growth that month.

It noted that there was “over-proportional” growth in the metal processing and the automotive sectors. The increase in industrial production more than offset a 2.3% decline in building and construction, the ministry said.

May’s increase in production followed continued improvements in orders over the past few months, even though orders in May fell 0.5% from April.

On a two-month sequential comparison between February/March and April/May, the ministry said production rose 4.3%.

Compared with April/May 2009, production rose 13.2%, it added.

Munich-based economic research institute Ifo said it expected industrial production growth in Europe to be weaker in the third and fourth quarters of 2010.

The institute cited fiscal consolidation in the eurozone economy and high unemployment, which would dampen demand, among other factors.

US plastics compounder A Schulman said on Thursday that it was seeing continued improvements in Europe, despite the debt crisis. The company’s European business was focused on stronger regions in the north and east, it said.

However, A Schulman said it was not likely to return to the pre-economic crisis levels seen in its 2008 fiscal year in Europe “until market volumes recover significantly”.

The company would be "vigilant in monitoring" the credit worthiness of its European customers, it added.

Germany’s chemical producers said this week that chemical production in the first six months of 2010 rose 13% from the same period last year.

However, chemical trade group VCI said it would maintain its earlier growth forecast of 8.5% for chemical production in 2010, because the second half of the year would be relatively weaker than the first, largely due to lower demand in the EU, the industry’s largest export market.

In 2009, Germany’s chemical production fell 10% from 2008.

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