October 17, 2019

Economic Outlook – Leading Indicators at a glance 09/2019


Leading indicators still down

Leading German economic indicators are still not showing any positive signs. The two Ifo business climate indices – current conditions index and expectations index are both pointing in the negative direction. Although the sentix Economic Index took a slight upward turn, it however, continues to be at a very low negative level. The Economic Sentiment Indicator and the Purchasing Managers' Index both saw a slight upswing. The latter, however, remained particularly low at 43.5 points, well below the growth threshold. The ZEW Index also clearly remained in the negative range despite showing an upward trend. According to official toll statistics, truck transportation volumes were down as well. Since the beginning of 2018, industrial production had already been separated from the toll statistics.


Still no signs of real recovery in leading indicators

The Eurozone leading indicators continues to show weak developments, though with a slight noticeable stabilization. The sentix Economic Index recovered moderately due to a somewhat less pessimistic expectation. General and partial indicators, however, clearly remained below zero. Although the German Purchasing Managers' Index also improved slightly to 47.0 points, it continues to post significantly below the growth threshold. The ZEW indicator also remained low despite some improvement. The Economic Sentiment Indicator for the eurozone rose slightly. For the entire EU, indicator lost ground.

The latest quarterly Ifo Business Climate data was published in June and showed a slight upward trend in Q2 2019. Although assessment of current conditions has worsened, sentiment has improved. Both components, however, continue to post below zero.

World Economy

Leading global indicators show weak performance

The leading global economic indicators continue to be weak as well. Both the OECD Index and the German Bundesbank's leading indicator for the global economy, which experienced some recovery in the summer, receded somewhat. Both indices are currently below their long-term average. The Global Purchasing Managers' Index was down again to a current 49.0 points. The RWI Container Index continues to show an upward trend despite declining global trade in past months. The Baltic Dry Index was again down following upward movement in previous weeks.
The latest quarterly Ifo Business Climate data for the global economy was published in June. The Climate Index climbed to -2.4 points in Q2 2019 thanks to considerably improved sentiment, which, however, still remains negative overall. The index reflecting current conditions was down slightly, but slightly in positive territory.

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. An index of the truck-mileage is compared with the industrial output, both indices are seasonally adjusted.
  • 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.

Charts Germany ()

Sentic Economic Index, Germany
ifo-Business Index Germany
Economic Sentiment Indicator, Deutschland
Purchasing Managers' Index
Zew-Indicator of Economic Sentiment
Truck Kilometers traveled and industrial output, Germany

Charts Eurozone ()

sentex Economic Index, Eurozone
Purchasing Mangers' Index, Eurozone
ifo Economic Climate for the Eurozone
ZEW-Indicator of Economic Sentiment
Economic Sentiment Indicator

Charts World Economy ()

OECD composite leading Indicator
Bundesbank leading indicator for the world economy
Purchasing Managers' Index
ifo World Economic Climate
Container Througput Index and World Trade
Baltic Dry Index


Volker Leinweber

Volkswirtschaftliche Grundsatzfragen

Volker Leinweber

Joshua Wagener

Volkswirtschaftliche Grundsatzfragen

Joshua Wagener