October 29, 2020

Economic Outlook

1. Germany

Leading economic indicators are recovering

The major leading German economic indicators continued their recovery courses. Both the expecations and current situation indices of the Ifo-Business Index are pointing in the positive direction. The purchasing managers’ index and the economic sentiment indicator improved have imporved five consecutive months running. With that, the purchasing manager index is currently noticeably above the growth threshhold of 50 points. The October figures for both the ZEW-business expectations and the sentix business index are already available. They are both showing negative trends for the coming months. The trucking mileage increased in September albeit with a somewhat dammpened dynamic.

2. Eurozone

The early and sentiment indicators are showing mixed signals

In the Eurozone the early and sentiment indicators are showing differentiated signals. The economic sentiment indicator has been showing a steady upward development starting from a low level in May. The purchasing managers‘ index has now also risen noticeably above the growth level. By contrast, the sentix index and the ZEW business index have deteriorated. The ZEW indicator fell noticeably in October for the second month in row. The OECD leading indicator for the Eurozone could not maintain its noticeable recovery. The index fell drastically after making up a good three quarters of its drastic corona-related losses.

3. World Economy

Global leading indicators are in the upswing

The leading global economic indicators are showing very robust developments. The OECD leading indicator, der Bundesbank-leading indicator and the purchasing managers‘ index continue the recovery course they set back in May. To that extent, the purchasing managers‘ index and the Bundesbank-Indicators are coming in at their pre-corona-crises levels. The sentix-business index is showing differing developments for current sentiments and expectations. The current sentiment has improved again, but the balance is well below the zero mark. The expectations index has retreated slightly relative to last month. The Baltic dry index has retreated substantially after a very strong increase in the second half of September.

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 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). It is also published seperately for the Eurozone.

– 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.

Charts Germany ()

ifo Business Climate Index Germany
Economic Sentiment Index Germany
Truck kilometers Germany
sentix Economic Index Germany
Purchasing Managers' Index Germany
ZEW Economic index

Charts Eurozone ()

Economic Sentiment Index
sentix economic index
ZEW-Indicator of Economic Sentiment
OECD Composite leading indicator
Purchasing Managers' Index

Charts World Economy ()

Container throughput index and world trade
Bundesbank leading indicator for world economy
sentix economic index world
Baltic Dry Index
OECD composite leading indicator
Purchasing Managers' Index

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