14. June 2016

Economic Outlook, June 2016

1. Germany - Improvement of most indicators

Most leading indicators for Germany have recently shown improvements. The Ifo Business Climate Index (Ifo-Geschäftsklimaindex) recorded a rise both in terms of the assessment of the current situation and as to business expectations compared to the previous month. The Sentix Economic Index (sentix-Konjunkturindex) showed a similar development. The Purchasing Managers’ Index for the German Industry (Einkaufsmanagerindex) increased by 0.3 and now stands at 52.1 points. The Economic Sentiment Indicator also went up.

Only the ZEW Indicator of Economic Sentiment (ZEW-Konjunkturindikator) fell again. The data on the mileage of trucks (according to the toll statistics) currently do not provide a reliable indication: An extension of the toll road network in July 2015 means the numbers cannot be compared to the previous year.

2. Eurozone - Uneven picture

The leading indicators for the Eurozone continue to diverge. The Economic Sentiment Indicator showed an improvement, both for the Eurozone and the EU as a whole. The Sentix Economic Index (sentix-Konjunkturindex) also rose, reflecting an improved assessment of the current situation as well as brighter business expectations.

In contrast, the ZEW Indicator of Economic Sentiment (ZEW-Konjunkturindikator) and the Purchasing Managers’ Index for the Industry in the Euro area (Einkaufsmanagerindex) both declined, although the latter still stands above the so-called growth threshold at 51.5 points.

The most recent quarterly Ifo Index for the Eurozone from April showed a fall, both in the assessment of the business activity and the business expectations.

3. World Economy - Global leading indicators bottoming out

The leading indicators for the world economy show signs of bottoming out. While the OECD-leading indicator stagnated, the German Federal Bank’s leading indicator (Bundesbank Frühindikator) managed to rise slightly. However, both remained far below their long-time average. The Purchasing Managers’ Index (Einkaufsmanagerindex) for the industry increased marginally by 0.2 to 50.3 points.

The freight index fell to some extent, whereas the Baltic Dry Index moved sideways in the last month. The most recent quarterly Ifo Index for the World Economic Climate from April recorded a fall. Although the assessment of the economic situation rose marginally, the business expectations deteriorated compared to January.

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Volker Leinweber

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