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CEMBUREAU Quarterly Economic Report: Part four – Germany and Spain

World Cement,


The German economy continued to record positive growth on a quarterly basis, albeit at moderate rates (+0.4% after +0.3% in Q1 15) equating with a +1.5% increase year-on-year (i.e. the highest since 1Q14). Contrary to the two previous quarters, growth in exports gained speed and provided their strongest contribution to growth since 4Q12, while final household consumption was particularly weak (+0.1%) and gross fixed investment abruptly plummeted by -2.3%. External demand turned out to be driver for growth of German economy even in 2Q15, despite slowing demand from emerging economies.

Industrial production increased on a quarterly basis for the fourth consecutive quarter, i.e. by +0.4% (same rate as in 1Q15) equating to a year-on-year growth of +0.7%, the highest since 1Q14. As a result, the upward year-on-year trend observed since 3Q12 continued, resulting in rather high levels in historical terms, i.e. only 1 percentage point below the all-time peak of 1Q08.

The construction production index decreased by -2.3% quarter-on-quarter. Figures revealed diverging trends between total construction and residential on the one hand and civil engineering on the other. The latter has continued to considerably outperform both the residential subsector and total construction since 1Q13.

Reflecting subdued construction activity, construction investment in 2Q15 also recorded a quarterly drop, i.e. by -1.2% after +1.8% in 1Q15, but it translated into a growth of +0.9% on a yearly basis due to the very weak performance in 1Q14. Contrary to the construction production index, the drop in construction investment was basically due to the plunge in the other construction subsector (of -3.6%), having shown diverging trends compared to the residential construction since 1Q13, meaning that the residential sector has outperformed the other subsector in historical terms (+0.5%, i.e. fourth consecutive quarter on the rise).

Cement manufacturing decreased on a quarterly basis for the third consecutive quarter, i.e by -1.8%, but remained at rather high levels in historical terms.


The upturn of the Spanish economy gained further ground in 2Q15, as real GDP grew by +1%, i.e. for the eighth consecutive quarter (further to +0.7% in 4Q14), resulting in a year-on-year growth rate of +3.1%, the highest observed since the onset of the crisis of 2008. The consolidation of the Spanish recovery has primarily been driven by domestic demand, particularly from gross fixed investment and imports, but exports also provided positive contribution to GDP growth.

Leading indicators for industrial activity showed a positive picture. Industrial production recorded the third consecutive quarterly rise (of +1.3%, same as in 1Q15) corresponding to the seventh consecutive increase in annual terms (by +2.8%, most pronounced since 2Q07), although absolute levels remain rather low compared to the peak prior to the crisis, as the cumulative loss since then, albeit reduced, amounts to a considerable -26.7%.

On the other hand, the cement manufacturing index improved somewhat, i.e. by a moderate +0.5% on 1Q15, albeit decreasing year-on-year by the same rate, having shown small fluctuations above the historical low of 1Q13 over the last four quarters. Once put in a longer-term context, cement-manufacturing activity has remained around very low levels and the overall peak-to-trough decline since 1Q07 has reached -73%.

Construction sector data continued to show mixed signs as already seen in 1Q15. Total construction production was weak as the index increased on a quarterly basis by a tiny +0.1%, with sub-segments recording diverging performances (residential increased by +0.3%, while civil engineering production decreased by -1.1%). The civil engineering construction index has performed relatively much worse than total construction and residential since 1Q13.

The residential subsector has continued to benefit from some recovery in housing affordability resulting from the end of the long downward correction in house prices from the pre-recession peaks, although the housing market is once again showing signs of weakness after three positive quarters, as residential property prices decreased by -0.6% on a quarterly basis.

Unlike the total construction production index, the recovery in the value of total construction investment continued, resulting in the fifth consecutive improvement on a quarterly basis by +1.4%, which corresponded to another remarkable year-on-year increase of +4.9%. In particular, the recovery in real fixed residential investment has been moderate but constant since 4Q13. Equally, other construction (including civil engineering investment) increased on a quarterly basis by +1.5%, lower than in 1Q15 (+2.6%). Since the onset of the construction crisis in 2008, however, it is worth noting that real fixed investment in other construction has largely outperformed the residential subsector (reflecting more room for public spending in infrastructure following from years of severe austerity) that has been most severely impacted by crisis, despite improvements over the last five quarters.

Written by Cembureau

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