Bundesbank says German economy robust but cautions on August

[September 22, 2014]  FRANKFURT (Reuters) - Germany's economy remains robust, the country's central bank said on Monday, predicting a generally positive end to the year despite a slowdown so far.

In its monthly report for September, the Bundesbank said German industry had been given a boost in July by the fact that there were fewer school holidays during that month. August, it said, however, would see the opposite.

"The economic prospects for Germany have become duller since the middle of this year," officials write in the report, citing 'geopolitical tensions', a reference to the conflict in Ukraine that has already hit business confidence.

"Nevertheless, the general economic trend should stay positive despite the slowdown in the speed of expansion in the first half of 2014."

The German economy shrank slightly in the second quarter of the year, prompting some including the Organization for Economic Cooperation and Development to cut its forecast for the year the country.

And while the government predicts the economy will expand by 1.8 percent this year, Finance Minister Wolfgang Schaeuble has said it may just miss that forecast, according to sources.

The Bundesbank sounded a note of caution about August, warning against expecting a similarly strong performance as July because more school holidays had been shifted to that month.

German industrial output posted its biggest monthly increase since March 2012 in July.

"The strong seasonally-adjusted growth in industrial production is chiefly down to the fact that school holidays have been mainly in August."

"Missed production due to holidays in July was less than normal for the time of year. The opposite effect is to be expected in August."

(Reporting By John O'Donnell)

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