December 17, 2018

Economic Outlook

Germany

Leading indicators point to slow-down

Leading indicators for the German economy are showing little momentum. Following a surprisingly steep rise in August, the Ifo Business Climate Index edged slightly lower in September, both in terms of current assessment of the business situation and expectations. The German Purchasing Managers’ Index fell significantly, down by 2.2 to 53.7 points. It did, however, manage to remain well above the growth threshold. The Economic Sentiment Indicator remained unchanged overall with a slight recovery in both the ZEW Indicator of Economic Sentiment and the sentix Economic Index. The sentix Economic Index saw an increase both in terms of current assessment of the business situation and expectations even though it remained generally negative. In contrast, toll road statistics showed a significant increase in truck mileage.

Eurozone

Leading indicators with little momentum

Leading indicators for the eurozone showed a weak development. The sentix Economic Index edged slightly lower due to a more negative current assessment of the business situation, even though expectations improved slightly. The Economic Sentiment Indicator also saw a minor decrease, while the Purchasing Managers’ Index experienced a more significant drop of 1.4 to 53.2 points. The ZEW Indicator of Economic Sentiment continued its recovery. The latest Ifo Business Climate indicators for the eurozone, which are published quarterly, are taken from the August edition. The index dropped significantly at that time from +31.1 to +19.6 points. Assessment of the business situation fell from +49.9 to +41.1 points, while expectations plummeted from +13.8 to -0.1 points.

Global economy

Leading global indicators show downward trend

Global economy leading indicators are down. Both the OECD leading indicator and the German Bundesbank’s leading indicator for the global economy continued to drop, falling below their long-term average. The Global Purchasing Managers’ Index remained volatile, down 0.7 points in September, still well above the growth threshold, however, at 54.3 points. The shipping container handling Index is showing signs of stagnation, while the Baltic Dry Index experienced another drop after its recovery in the second half of September. The latest Ifo World Economic Climate indicators, which are published quarterly, are taken from the August edition. The index continued to drop to a mere +2.9 points. While assessment of the business situation came in at +17.5 points, average expectations fell to -10.6 points.

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