15. September 2016

Economic Outlook, September 2016

1 Germany - Most leading indicators point downwards

Most leading indicators for the German economy continued to further decrease. The Ifo Business Climate Index (Ifo-Geschäftsklimaindex) decreased due to deterioration of business expectations and the assessment of the current situation. Likewise, the Sentix Economic Index (sentix-Konjunkturindex) declined but showed a better assessment of the business situation than in the previous month. The Purchasing Managers’ Index for the German Industry (Einkaufsmanagerindex) dropped to 53.6 points – still remaining at a high level. The Economic Sentiment Indicator also decreased, while the ZEW Indicator of Economic Sentiment (ZEW-Konjunkturindikator) improved marginally. The data on the mileage of trucks reflected a slight increase according to the toll statistics.

2 Eurozone – Uneven picture

The leading indicators for the Eurozone do not provide a clear picture. The Sentix Economic Index (sentix-Konjunkturindex) managed to recover slightly - reflecting an improved assessment of the current situation as well as brighter business expectations. The ZEW Indicator of Economic Sentiment (ZEW-Konjunkturindikator) increased from a low level. However, the Economic Sentiment Indicator on the other hand fell for both the Eurozone (ESI) and the entire EU. The Purchasing Managers’ Index for the Industry in the Euro area (Einkaufsmanagerindex) fell to 51.7 points.

The most recent quarterly Ifo Index for the Eurozone was published in July. Although the assessment of the current situation improved since the previous quarter and was described as good, the business expectations fell once again.

3 World Economy - Mixed development of global leading indicators

The development of the leading global indicators for the world economy remains mixed. The German Federal Bank’s leading indicator (Bundesbank Frühindikator) continued its improvement – reaching its long-term average. Likewise, the OECD business climate index (OECD-Geschäftsklimaindex) continued its recovery. In contrast, the global Purchasing Managers’ Index (Einkaufsmanagerindex) for the industry further decreased to 50.5 points, now sitting barely above the so-called growth treshold of 50 points. The Baltic Dry Index and the freight indexes managed to increase.

The latest quarterly Ifo Index for the World Economic Climate from July recorded a fall. 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, September 2016

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Volker Leinweber

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