Europe’s largest economy remains buoyant

FRANKFURT—Higher energy prices drove Germany’s consumer-price inflation slightly higher in June, as preliminary data Tuesday showed the rate remained above the European Central Bank’s inflation target for the sixth consecutive month.

The benign rise, however, is unlikely to keep the ECB from raising interest rates this month, according to analysts.

The preliminary consumer-price index for June was 0.1% higher than in May and 2.3% higher than a year earlier, the German Federal Statistics Office, or Destatis said Tuesday.

The figures were just below expectations of 0.2% for the month and in line with a 2.3% increase forecast on the year. Headline inflation has remained above the ECB’s “below but close to 2%” inflation target for the sixth month in a row.

On a European-Union harmonized basis, consumer inflation for the month was flat and 2.4% higher than a year earlier. (more)

German IFO Defies Forecasts And Rises To 3-Month High; Soft Patch Imminent

The IFO institute in Munich this morning reported that its survey of business climate in German improved to 114.5 from 114.2 in May and beat consensus expectations of a decline to 113.4. The current assessment index climbed to 123.3 from 121.4 in May amid expectations of drop to 120.8 and the expectations index met forecasts coming in at 106.3, slipping from 107.4. The heavily focused upon business climate index, which climbed, suggests that Germany is in fact managing to remain robust amid gathering storm clouds of the EMU debt crisis and slowing global growth.

However, the recent downward revision of global growth by the IMF to 4.3% from 4.4% for 2011, citing contagion risks from the EMU debt crisis and shaky growth in the US, does not bode well for German which can only allude the ‘soft path’ of growth which has already taken hold of several other economies. As such, we believe that Germany is in fact on the cusp of such a ‘soft patch’ and the robust levels that we came accustomed to in recent quarters will not hold up through H2 2011. This belief was affirmed by Fed. Chair Bernanke’s comments this week that there will be no further support for the US economy at this time, all but solidifying a period of slower US, and global, growth. (more)

Potsdam Is Better Than Hamptons as Millionaires Buy Villas

Potsdam, where Prussia’s Friedrich the Great hosted the philosopher Voltaire and plotted wars to expand his kingdom, is enjoying a post-communist revival that’s pushed up home prices to the highest in eastern Germany. And there’s more to come.

The city, 27 kilometers (17 miles) southwest of downtown Berlin by car, has attracted corporate executives and figures from the arts world since German reunification in 1990. Residents include Hasso Plattner, co-founder of SAP AG (SAP), Axel Springer AG (SPR) Chief Executive Officer Mathias Doepfner, fashion designer Wolfgang Joop and film director Volker Schloendorff.

“If Berlin is Germany’s New York, Potsdam is better than the Hamptons or Long Island because the commute is shorter and it has everything from shopping to culture,” said Victoria von Koeckritz, a real-estate broker at Engel & Voelkers based in the city. The firm has 195 offices in Germany, 29 in the U.S. and outlets in 37 other countries. (more)


Germany’s Property Renaissance

Fancy buying a house in Germany? Institutional and retail investors are flooding back to a market that was briefly fashionable during the boom. House prices have soared in some of the biggest cities. Berlin prime residential property prices are up 17% since October; in Frankfurt, 15%. But investors should be wary: This is a highly localized market.

In theory, the case for German residential property is compelling: Although the population is shrinking, household formation is rising. Construction activity is weak, leading to shortages of supply. Building permits for single-family homes have fallen 37% since 2006. In Berlin, rents have risen 8% over the past two years.

These trends lured plenty of investors into the market precrisis. Between 2004 and 2007, housing portfolios worth €60 billion ($86 billion) changed hands, according to official data. Private-equity investors were particularly active acquiring housing stock from cash-strapped local authorities, believing they could cut costs, raise rents and sell some properties to tenants. (more)

German tax take up 10 percent year-on-year in May as economy booms

BERLIN — An improving jobs market powered by buoyant economic growth helped Germany’s tax take rise 10.1 percent higher in May from a year earlier, the Finance Ministry said Monday.

News of the swelling government coffers comes as the junior party in Chancellor Angela Merkel’s government has revived calls for tax cuts, which has been divisive issue in the governing coalition.

A key impetus behind the buoyant tax receipts, which totalled €42 billion ($60 billion), was a hefty 16.3 percent increase in income tax revenues, which were bolstered by more people in employment and the migration of many back to full-time work as the recovery from recession has taken root.

German Stocks Climb for Second Day; ThyssenKrupp, Q-Cells Rise

June 14 (Bloomberg) — German stocks rose for a second day, led by gains in basic-resource companies, as China reported industrial production that topped forecasts.

ThyssenKrupp AG and Salzgitter AG, Germany’s biggest steelmakers, climbed with metal prices. Q-Cells SE and Solarworld AG advanced more than 2 percent as Handelsblatt reported that LDK Solar Co. is seeking acquisitions in Germany.

The benchmark DAX Index rose 1.8 percent to 7,210.19 at 11:10 a.m. in Frankfurt. The gauge has still fallen 4.2 percent from this year’s high on May 2 amid concern that the U.S. economic recovery is slowing and as speculation grew that Greece may default on its debt. The broader HDAX Index climbed 1.7 percent today.

“China’s industrial output was a big surprise today as everyone in the last few days was worried about the economy slowing down in the country,” said Andreas Lipkow, an equity trader at MWB Fairtrade Wertpapierhandelsbank AG in Frankfurt. “Markets are reacting positively and the data had a good impact on steel companies.”

German Market Rises As Data Cheer Investors

(RTTNews) – Better-than-expected economic data and some broker actions cheered the German market in early afternoon Tuesday, ahead of Federal Reserve Chairman Ben Bernanke’s speech on the U.S. economy later in the day. Higher U.S. index futures as well as commodity prices also helped lift overall sentiment.

The Euro Stoxx 50 index of eurozone bluechip stocks is adding 0.55 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is gaining 0.31 percent.(more)

Renewable energy to lower costs, boost economy — German official

Investments in the production of renewable energy may not only drive down skyrocketing electricity costs but may boost the economy as well, according to a visiting German parliament member.

During the first Philippine Solar Photovoltaic Summit held Thrusday at the SMX Convention Center in Pasay City, Hans-Josef Fell, author of the German renewable energy (RE) law, underscored renewable energy’s vital function for the economy.

“Renewabe energies in Germany have gone through an astonishing industrial expansion in the past decade. [As much as] 300,000 jobs were created in the renewable energy sector, 120,000 of it from the solar sector alone,” he said in notes released Friday by the Philippine Solar Power Alliance (PSPA). (more