Following robust growth in the first two quarters of 2015, the Bundesbank's economists expect the German economy to continue its positive development. "The conditions are currently in place for fairly solid economic growth in the second half of 2015, fuelled by both external and domestic demand," according to the latest Monthly Report, for August.

As recently reported by the Federal Statistical Office, gross domestic product (GDP) rose by 0.4% after adjustment for seasonal and calendar factors in the second quarter. Thus, the German economy's fairly robust upswing continued in the second quarter of 2015. There had already been moderate GDP growth of 0.3% at the beginning of 2015. Economic growth was also greater year on year, as reported by the Federal Statistical Office, with price-adjusted GDP 1.6% higher than in the first three months of last year.

The Bundesbank's economists believe that the German labour market, too, benefited from the continued revival of the German economy. "Both the level of employment and vacancies rose again, while unemployment fell," the Monthly Report states. Although the number of "mini-jobs" declined sharply, at the same time, the number of jobs subject to social security contributions rose steeply. The Bundesbank's economists also put these shifts down to the introduction of the general statutory minimum wage. "Apart from this transmutation effect, the impact of the introduction of the minimum wage on the total number of hours worked appears to be very limited in the context of the currently favourable economic environment," according to the report.

Dynamic export growth

Economic activity in the second quarter was provided with considerable impulses by external demand, with goods exports in this period up by a price and seasonally adjusted 3% compared with the previous quarter. According to the Bundesbank's economists' analysis, sales were significantly higher in both euro-area and non-euro-area countries.

The dynamic export growth offset the fact that the impulses from the domestic economy were less substantial in the reporting period than in the fourth quarter of 2014 and the first quarter of 2015, the report states. Following sharp increases in the previous quarters, import growth tapered off recently. Imports of goods in the second quarter exceeded the level of the previous quarter by just ¼% in real terms, write the Bundesbank's economists.

Private consumption continued to be an important mainstay of domestic demand in the second quarter. Strong growth stimuli, as had been seen in the fourth quarter of 2014 and the first quarter of 2015, were, however, not present in light of the previous quick adjustment to the greater scope for expenditure, the report states. Industrial output, too, once again increased only moderately in the second quarter of 2015. After seasonal adjustment, it was ¼% higher than in the first quarter.