23. August 2016

Economic Outlook, August 2016

1. Germany: Upward trend comes to a halt

The positive development of the leading indicators for the German economy recorded in the last months has stopped once again. The ZEW Indicator of Economic Sentiment (ZEW-Konjunkturindikator) fell sharply, while the Ifo Business Climate Index (Ifo-Geschäftsklimaindex) decreased slightly due to a deterioration of business expectations. Likewise, the Purchasing Managers’ Index for the German Industry dropped, albeit from a high level. It currently stands at 53.8 points. The Economic Sentiment Indicator remained almost unchanged. While the Sentix Economic Index (sentix-Konjunkturindex) improved marginally, it also showed a more negative assessment of the business situation than in the previous month. The data on the mileage of trucks (according to the toll statistics) do not provide a reliable indication: An extension of the toll road network in July 2015 means the numbers cannot yet be compared to the previous year.

2. Eurozone: Many leading indicators point downwards

The leading indicators for the Eurozone remain weak. The Purchasing Managers’ Index for the Industry in the Euro area (Einkaufsmanagerindex) fell by 0.8 to 52.0 points. The ZEW Indicator of Economic Sentiment (ZEW-Konjunkturindikator) also showed a sharp decrease. The Sentix Economic Index (sentix-Konjunkturindex) managed to recover slightly due to improved business expectations. However, the assessment of the current situation was weaker than in the previous month. The Economic Sentiment Indicator for the Eurozone (ESI) rose moderately, while the ESI for the entire EU dropped. The quarterly Ifo Index for the Eurozone also decreased: although the assessment of the current situation improved since the last quarter, the business expectations fell once again.

3. World Economy: Mixed development of global leading indicators

The development of the leading indicators for the world economy remains mixed. The German Federal Bank’s leading indicator (Bundesbank Frühindikator) continued its improvement. However, it still registers below its long-term average. In contrast, the global Purchasing Managers’ Index (Einkaufsmanagerindex) for the industry decreased to 51.0 points. The Baltic Dry Index recovered at a low level, and the freight indexes also managed to rise. However, the Container Throughput index has recently decoupled somewhat from the actual development of world trade. The quarterly Ifo Index for the World Economic Climate fell again – the assessment of the economic situation remained unchanged, but business expectations dropped sharply since April. At the time of publication, the OECD-leading indicator had not been updated yet.

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Economic Outlook, August 2016

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