German industrial orders fell more than expected in November and December retail sales slow slightly in 2016. But the outlook is still as seen bright for the euro zone's biggest economy, even if inflation could cast some future shadows. David Pollard reports.
Europe's largest economy is still clocking up the gains ... But that's not to say there won't be the odd blip. After October's huge five per cent surge, German industrial orders in November were down. A two and a half per cent drop even bigger than expected. Most economists see a temporary hit ... Others argue the fall augurs badly for German exports. And new thinking may be required. (SOUNDBITE) (English) CHIEF ECONOMIC ADVISER, CEBR, VICKY PRYCE, SAYING: "The interesting thing will be whether that change if you like in the international environment for their products will switch policies in Germany itself and they will focus a lot more on doing something about domestic demand in the future." Domestic demand is strong - at least from consumers - although 2016 retail sales are confirmed to have slowed slightly from the previous year. But so too are price rises. Some German economists - led by the IFO - have opened up the debate this week on whether the ECB should call time on ultra-loose monetary policy. And with German inflation now at 1.7 per cent year on year - why not? (SOUNDBITE) (English) CHIEF ECONOMIC ADVISER, CEBR, VICKY PRYCE, SAYING: "Energy prices have been very significant ... It's not necessarily the underlying growth of the economy that's done that. So we have to be very, very careful. I think personally that the risks are still quite significant there, that we're going to see very, very modest growth this year in the euro zone." And one new study shows real wages for Germans with collective pay agreements rose less sharply in 2016 than in the two previous years. Purchasing power possibly under threat - at a time when consumer demand could be most needed.