German economy shows resilience as industrial output stabilizes
Despite volatile industrial orders, the German economy is on track for a fourth consecutive quarter of growth. Bantleon analysts warn that rising real interest rates remain a primary risk for bond markets.
Germany's economy has demonstrated continued growth in the third quarter, driven by a 2.0% increase in industrial production and a significant 9.3% expansion in the construction sector. While order intake in the manufacturing sector fluctuated sharply in August, analysts note that these figures are heavily skewed by large-scale orders, masking a more stable underlying performance.
Harald Preißler, capital market strategist at Bantleon, emphasizes that the broader industrial sector is successfully compensating for the ongoing weakness in the German automotive industry. This diversification has helped maintain a positive growth trajectory, marking the longest period of sustained expansion for the German economy since 2021-22.
However, global bond markets remain under pressure. The MOVE index, which tracks implied volatility in US Treasuries, has reached its highest level since March. Bantleon points to rising real interest rates, driven by shifts in global pension fund strategies and increased capital competition from AI-related investments, as the main factors weighing on market outlooks. The firm expects these conditions to persist until at least the spring of 2027.