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Thursday, May 15, 2008

German GDP Q1 2008

German economic growth accelerated to the fastest pace in 12 years in the first quarter as companies stepped up spending on machinery and construction. Gross domestic product rose 1.5 percent from the fourth quarter, when it increased 0.3 percent, the Federal Statistics Office in Wiesbaden said today. That's the highest quarterly growth rate since the second quarter of 1996.

Economic growth was based on both domestic uses and foreign trade. In particular gross capital formation experienced a rise on the fourth quarter of 2007 and on a year earlier. The same was true, albeit to a lesser extent, of final consumption expenditure. Net exports also contributed to growth, though only in a year-on-year comparison.
Federal Statistics Office

Year on year the price-adjusted GDP was up 1.8% in the first quarter of 2008 compared with the same quarter a year earlier. When calendar-adjusted, the growth rate was even 2.6% because in the reference quarter there where two working days less compared to the first quarter of 2007.

Good weather kept building sites open in the three months through March, aiding a construction industry already recovering from a decade-long slump after booming exports fueled company investment last year. This year's winter was ``exceptionally mild'' and sunny, with temperatures 2.7 degrees Celsius above the long-term average making it the sixth warmest since 1901, according to the German weather service.

``The surprisingly strong performance was almost entirely driven by the absence of a winter and masks a much weaker trend,'' said Holger Schmieding, chief European economist at Bank of America Corp. in London. ``From now on, German growth will stagnate.''

The statistics office said investment was the main driver of first-quarter expansion and consumer spending made a small contribution. While exports aided annual growth, they didn't contribute to expansion in the quarter. In the first quarter of 2008 there were 39.8 million persons in employment, an increase of 686,000 persons or 1.8%on a year earlier.

German exports and manufacturing orders both fell in March and business confidence declined for the first time in four months in April.

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