Industrial business expectations have now improved slightly for the second month in a row. Export expectations are evidently providing a particular boost, helped by signs of a pickup in Asia and ongoing growth in the USA.
Nevertheless, German industrial production is likely to shrink marginally in the
fourth quarter. On the GDP front, we are expecting stagnation or, at best, minimal growth in the final quarter. However, given the unusually high (negative) working-day effect in the fourth quarter, working-day adjustment of GDP poses considerable problems and adds to uncertainty about the growth rate. But the prospects that the German economy will markedly pick up speed in the first quarter of next year are now pretty good. Economic pessimism is misplaced.