GERMAN DATA: Weak Capital Investment Drags GDP Lower (1/2)

German Q2'24 final GDP growth was -0.1% Q/Q as expected (+0.1% prior). Underlying drivers were released, and some revisions altered the picture from last quarter also:

• Private Consumption -0.2% Q/Q vs 0.0% cons; +0.3% prior, a strong upward revision from -0.4%. Strong Q1 real wage gains suggest some upside potential here looking forward. The weak figure indicates consumer caution, though - which appears to consist considering today's drop in GfK consumer confidence (-22.0 vs -18.2 cons; -18.6 prior).
• Government Spending +1.0% Q/Q vs +0.2% cons; -0.1% prior, revised from -0.4%. Note that further gov't spending upside contributions will be limited as per the 2024/2025 budgets / limited fiscal headroom.
• Capital Investment -2.2% Q/Q vs -1.5% cons; +0.1% prior, downwardly revised from +1.2%. The fact that capital investment was weak hardly comes as a surprise as it was mentioned by Destatis as the main downward contributor in the flash release. However, the narrative in Q1 was that especially construction inv drove growth upwards amid good weather - the downward revision draws that into question. Equipment investment was especially weak in Q2 (-4.1% Q/Q vs -1.6% prior).
• Exports -0.2% Q/Q vs +1.3% prior (no cons). This shows the absence of the external sector push from last quarter (given imports 0.0% vs +0.8% prior). Excl. the external sector, GDP growth would have been flat in Q2. IFO export expectations have moved further into contractionary territory this month, so little upside to be expected for Q3.