February 07, 2020

Economic Outlook

1 Germany

Slight increase of the leading indicators on the current margin

Most of the leading German economic indicators are showing a slight increase on the margin, however, they continue to come in at a low level. The ifo-business index improved the last two consequitive months. At the same time, both the current and expectation indices are in positive territorties. The Economic Sentiment indicator rose marginally in December. The purchasing managers‘ index could not, however, continue the positive trend and fell from 44.1 to 43.7 points. To that extent, the index continues to post below the growth level. The ZEW-economic expectation at least improved drastically, and is for the first time since April 2019 in positive territory. The sentix-economic index is also showing signs of growth and is currently above the zero level again. According to the toll road statistics, the trucking index is moving in the sideways direction with relatively high volatility.

2 Eurozone

Many leading indicators have ended their negative trends

The Eurozone leading indicators have also ended their downward spiral, at least for the time being. While the EU Economic Sentiment Indicator has stabilized at 100 points, the EU currency index has increased slightly. The EU Zone Sentix-business index has again risen noticeably above the zero point. The current and expected indicators are thus showing an upward trend. The ZEW-Indicator of economic expectations again improved noticeably from -1.0 to +11.2 points, again showing a balance in positive territory. Conversly, the purchasing managers‘ index is tending negatively. The index lost about 1.0 point in December relative to the month of November and currently posts at 45.9 points.
The quarterly ifo-business climate declined even further. For the first time in three years, the current position is again showing a slight negative with a balance of -3.5 percentage points. Expectations are also declining from about 9.4 to -28.3 points.

3 World Economy

Global leading indicators showing mixed results

The world economic leading indicators are showing mixed signals. The OECD leading indicator as well as the Bundesbank-leading indicator are increasing slightly after a long sideways movement. The Container throughput index continues to rise, however, world trade is not follwing suit. The purchasing managers‘ index lost about 0.5 points to fall to 48.2 points. As a result, the index has continiously performed below the growth level since May. The Baltic Dry Index recorded a drastic drop in the last weeks. The quarterly ifo-world economic index has further declined. The current position has a balance of -16.4 percentage points, a negative of 11 points. The expected balance shows a decline from -14.7 to -21.1 points.

Appendix: Descriptions of leading indicators

  • The Ifo Business Climate is a widely observed leading indicator for economic development in Germany. It is based on ca. 7,000 monthly survey responses of firms in manufacturing, construction, wholesaling and retailing.

  • The Ifo Index for the Economic Climate in the Eurozone as well as the Ifo World Economic Climate Index are based on a survey of 1,000 or 300 economic experts respectively.

  • The Purchasing Managers’ Index (PMI) for the German Industry (Einkaufsmanager-index) is based on estimations by purchasing managers of industrial companies. The PMI for the Industry in the world economy is calculated by us. It conveys the average of the PMIs of the Eurozone, the USA, the UK, Japan, China and Brasil, weighted according to their share of world GDP.

  • The European Economic Sentiment Indicator is based on a survey of businesses from industry, trade, construction as well as service providers and consumers.

  • The ZEW Indicator of Economic Sentiment (ZEW-Konjunkturindikator) is based on a survey of over 300 financial experts.

  • The toll statistics account for the mileage of trucks that are liable to tolls on German autobahns measured in kms. The change of the amount compared with the same month of the previous year (adjusted for the calendar effect) serves as an indicator.

  • The Sentix Economic Index (sentix-Konjunkturindex) is based on a survey of 2,500 private and institutional financial market participants.

  • The OECD business climate index (OECD-Geschäftsklimaindex) is the weighted average of business climate indexes from 33 countries and is based on company surveys (OECD-members such as Brazil, China, India, Indonesia, Russia and South Africa).

  • The German Federal Bank’s leading indicator (Bundesbank Frühindikator) for the world economy is made up of several global indicators (Purchasing Managers’
    Index for industry, Purchasing Managers’ Index for services, consumer climate for the current economic situation, consumer climate for business expectations, S&P Global 1200 stock index).

  • The Baltic Dry Index is an important price index for tracking international shipping costs for dry bulk commodities.

  • The Container Throughput Index is a joint project of the Rheinisch-Westfälisches Wirtschaftsforschungsinstitut (RWI) and the Institute of Shipping Economics and Logistics (ISL). It is based on market observations in 72 international ports that
    together make up about 60 percent of the worldwide container handling of
    manufactured goods.

Diagrams Germany ()

sentix Economic Index, Germany
Purchasing Managers' Index
ifo-Business Climate Index
Economic Sentiment Index
Truck kilometers traveled

Diagrams Eurozone ()

ifo Economic Climate Eurozone
Purchasing Managers' Index Eurozone
sentix Economic Index
ZEW-Indicator of Economic Sentiment
Economic Sentiment Index

Diagrams World ()

OECD composite leading indicator
ifo World Economic Climate
Bundesbank leading indicator
Container Throughput index and World Trade
Baltic Dry Index
Purchasing Managers' Index


Volker Leinweber

Volkswirtschaftliche Grundsatzfragen

Volker Leinweber

Joshua Wagener

Volkswirtschaftliche Grundsatzfragen

Joshua Wagener