September 04, 2020
Economic outlook-leading economic indicators at a glance for August 2020
Recovery after the crises continues
The leading German indicators continue their recovery after the massive meltdown of the economy in the wake of the coronavirus crises. The ifo-business climate recoverred close to three quarters of its corona-related losses. Lastly, the current assessment index has improved markedly. The purchasing mangers‘ index for the German industry climed back just above the growth margin of 50 points. The economic sentiment indicator, the ZEW business expections index and sentix business index all pointed in the positive direction. However, the sentix business index‘s current situation was clearly in the negative territory. The trucking capacity indet as measured by the toll statictics also saw increases in the postive direction, albeit still lower compared to last year’s level.
Leading indicators continue to recover
The leading European indicators also continue to recover after the economic meltdown in the wake of the corona crises. The sentix-business index remained below the zero-mark overall due to the negative current situation index. The economic sentiment indicator has been able to recover a good three quarters of its lost value. The OECD leading indicator for the Eurozone has recovered about a quarter of its lost value. The ZEW business managers‘ index for Eurozone industries with 51.8 points, has cleared the growth mark.
Global leading indicators are pointing in the positive direction
The world economic leading indicators continue to recover. The OECD-leading indicator has recovered more than three quarters of its corona-related losses. The Bundesbank world economic leading indicator is approaching its long-time average. The purchasing managers‘ index for industries is at the growth level again with 51.5 points. Despite the improvement, the sentix world economic business index is still in negative territory as a result of negative assessment of current situations. Expectations are positive but tending slightly negative lately. The container handling index recovered; however, the world’s economy has contracted by wide margins and currently shows no sign of recovery. The Baltic Dry Index has retreated again after some previous recovery; however, again showing positive signs on the current margins.
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 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). It is also published seperately for the Eurozone.
– 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