16. March 2016

Economic Outlook, March 2016

Germany - Leading indicators continue decline

The leading indicators for Germany have fallen again. The ifo Business Climate Index (ifo-Geschäftsklimaindex) decreased mainly due to worsened business expectations. The assessment of the business situation went up marginally. The Purchasing Managers’ Index for the German Industry (Einkaufsmanagerindex) decreased noticeably. At 50.2 points it no longer lies within the growth threshold. The Economic Sentiment Indicator and the ZEW Indicator of Economic Sentiment (ZEW-Konjunkturindikator) also both lost ground again. Solely the Sentix Economic Index (sentix-Konjunkturindex) recovered slightly. Expectations now lie just above the zero line again. The data on the mileage of trucks (according to the toll statistics) currently do not provide a conclusive indication as an extension of the toll road network in July 2015 means that statistics cannot be compared to the previous year.

Eurozone - Leading indicators also on a negative trend

The leading indicators for the Eurozone also point downwards. The Sentix Economic Index (sentix-Konjunkturindex) sank due to the worsened assessment of the business situation. Business expectations recovered at a low level. The Economic Sentiment Indicator went down for the Eurozone as well as for the EU overall. The ZEW Indicator of Economic Sentiment (ZEW-Konjunkturindikator) and the Purchasing Managers’ Index for the Industry in the Euro area (Einkaufsmanagerindex) also declined. At 51.2 points the latter remains just above the growth threshold.

The latest data for the ifo Index for the Economic Climate in the Eurozone, which are published quarterly (current figures from January 2016) also dropped. While the assessment of the business situation improved compared to three months ago, business expectations for the upcoming months decreased noticeably.

World Economy - Negative development

Almost all of the leading indicators for the world economy show a negative development. The OECD-leading indicator and the German Federal Bank’s leading indicator (Bundesbank Frühindikator) for the world economy declined further and now lie markedly below their long-term average. The Purchasing Managers’ Index (Einkaufsmanagerindex) for the industry sank below average for the first time in three years. It now sits at 49.8 points. Solely the freight indices point upwards. However, the Baltic Dry Index remains on an extremely low level.

The latest data for the World Economic Climate Index, which are published quarterly (current figures from January 2016) also dropped. The assessment of both the current economic situation and the business expectations was worse than three months ago.

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Economic Outlook March 2016

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Volker Leinweber

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