July 10, 2019

Economic Outlook - leading indicators at a glance 06/2019

1 Germany

Majority of leading indicators show downward trend

German economic leading indicators have recently been painting a mixed picture. The ifo Business Climate Index was down again in April and May following a brief recovery in March. In April, the German Manufacturing Purchasing Managers’ Index shifted away from the negative trend that characterized previous months and has recently been seeing sideways movement. ESI experienced a boost in May with the indicator up for the first time since November 2018 by 0.4 points. Economic expectations as reflected by the ZEW Indicator dropped to -2.1 points in May in the wake of favorable reports in previous months. The sentix Economic Index fell below zero as well, with the expectation indicator particularly taking a noticeable drop of 12.0 points. The high growth rates in toll statistics we have been seeing since July 2018 can be attributed to expansion of the toll road network.

2 Eurozone

Leading indicators low

Eurozone leading economic indicators remain particularly subdued. The sentix Economic Index fell to -3.3 points with the expectation indicator also down 12 points compared to the previous month. While the Economic Sentiment Indicator for the EU fell slightly by 0.2 points, the index for the eurozone saw an increase of 1.2 points. The Purchasing Managers’ Index stabilized below the growth threshold in March following a downward trend that began at the start of 2017. The ZEW Indicator posted low levels in early May, with the assessment of the economic situation somewhat more negative (-7.0 points) than expectations (-1.6 points). The ifo Business Climate Index experienced a slight upward trend in Q2. Expectations recovered noticeably even though negative reports continued to dominate.

3 Global Economy

Global leading indicators falter

Global Economy Global leading indicators falter The global economic leading indicators also reflect current lackluster sentiment. The OECD Index has been stable, albeit at a low since April, putting an end to its earlier long-time downward trend. The German Bundesbank’s leading indicator has even been pointing slightly upwards since February, although still below the long-time average. The Global Purchasing Managers’ Index for the global economy is currently hovering just above the growth threshold and fell to 50.1 points in May. The ifo Business Climate Index improved in Q2 to -2.4 points with negative reports still dominating. While the assessment of the economic situation saw sideways movement, expectations remained in the negative. The Baltic Dry Index recently experienced another slight drop.

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. 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).

  • 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.

Diagrams Germany (6)

Diagrams Eurozone (5)

Diagrams Global Economy (6)


Volker Leinweber

Volkswirtschaftliche Grundsatzfragen

Volker Leinweber

Joshua Wagener

Volkswirtschaftliche Grundsatzfragen

Joshua Wagener