Strong demand from euro zone countries for German industrial goods helped to cushion a drop in domestic orders in May, but the overall lacklustre data suggested that growth in Europe's largest economy would slow in the second quarter. As David Pollard reports, there was also disappointing data from Spain.
With Spain's met office issuing a yellow alert this week, it's summer heatwave time for some of Europe's tourists. Not, it seems, for some of its factory workers. Industrial output in Spain rose one per cent in May - its lowest rate in 16 months. Germany industrial orders were flat between April and May - an unspectacular, if still solid, 'no change.' (SOUNDBITE)(English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "The German economy is continuing to maintain a reasonable clip of growth. The question is, is that enough to sustain the rest of the euro zone, and I guess that's going to be question particularly if you start to think about that contingent damage from the Brexit scenario on the global stage." The optimist's view: a cheap euro is helping the euro zone shrug off doubts over the world economy. While boosting Germany's coffers: its new fiscal plans provide for a balanced budget - if only a small rise in the fiscal spending that others in the euro zone have called for. That - along with Brexit - another reason why the temperature gauge's going up a notch for euro zone leaders. (SOUNDBITE)(English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "It will be fascinating to see how those elections particularly in France and Germany play out in the course of 2017, because of course if there is the continued rise of populist parties, then I think going through 2017 into 2018 the trajectory of the euro zone project may well be looking to be moving in a different direction." Other data this week at least shows Spain's service sector is buoyant - hiring on the up. Plenty of cold beer for its summer visitors then - even as the cooling off in its factories is rather less welcome.