19. October 2016

Economic Outlook, October 2016

Germany – Booming tendency

Once again, all leading indicators for the German economy are pointing upwards. The Ifo Business Climate Index (Ifo-Geschäftsklimaindex) has risen as well as the sentix Economic index (sentix-Konjunkturindex). In both cases, both the assessment of the situation and the business expectations have improved. The Purchasing Managers’ Index for the Industry in the eurozone (Einkaufsmanagerindex) was able to almost completely compensate for the decline in the previous two months and currently stands at 54.3 points. The Economic Sentiment Indicator and the ZEW Indicator of Economic Sentiment (ZEW-Konjunkturindikator) have picked up as well. Furthermore, data on the mileage of trucks reflects an increase according to the toll statistics.

Eurozone – Comeback in sight

Leading indicators for the eurozone are rising as well. The sentix Economic index managed to recover slightly - reflecting an improved assessment of the current situation as well as brighter business expectations. The Purchasing Managers’ Index for the Industry in the eurozone went up to 52.6 points and is now again well above the growth threshold. The Economic Sentiment Indicator has gone up just like the ZEW Indicator of Economic Sentiment for the eurozone. The most recent quarterly Ifo index for the eurozone was published in July. Although the assessment of the current situation has improved since the previous quarter and was described as good, the business expectations have fallen once again.

World Economy – Upswing with restriction

Global leading indicators are also generally improving. The German Federal Bank’s leading indicator (Bundesbank Frühindikator) continues its upswing and is now back above its long-term average. The global Purchasing Managers’ Index rose to 51.4 points and both freight indices (Baltic Dry Index and Container Throughput Index) are increasing as well. However, world trade does not follow the booming trend. The OECD business climate index could not continue its recovery and decreased slightly.

The latest quarterly results of the Ifo World Economic Climate from July show a downward tendency. Although the assessment of the economic situation remained unchanged, the business expectations dropped sharply compared to the previous quarter.

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Economic Outlook, October 2016

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Volker Leinweber

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