The German economy in June 2017 – can it get any better? Really?


With a view to the most recent figures and indices tracing the German economy this question should indeed be permitted. After May 2017 setting record after record (cf. here) the question is whether June topped it again:

After closing 12,615 points on Wednesday, 31 May, the German DAX – again – set a new all-time high on 19 June with 12,888 (and with 12,951 points during the day coming close to 13,000) before falling to 12,325 on 30 June 2017 – thus losing 290 points in the course of the month. This is the first losing month for the DAX in quite a while…

Also, German exports in April 2017 (latest available figures) experienced a slight setback: After reaching a new record high, with exports reaching more than Euro 118bn in March 2017, exports fall back to only Euro 101bn in April 2017. How that makes a 0.9% INCREASE on a MoM-basis (as DeStatis states) remains a mystery to me. But I am only a lousy lawyer, so who am I to doubt the math? At least, everyone agrees that this figure makes for a decrease of 2.9% on a YoY-basis.

Although the German Target-2-balances for June are (again) not on the Deutsche Bundesbank Website at the time of the publication of this post (cf. here), it is a fair estimate that the amount further increased from the previous Euro 857bn in May 2017. The German Handelsblatt comments on this development stating first that the new hights should not be considered as a sign of capital flight – but then in the end admitting that if a country leaves the European Union, the German tax-payer would have to foot the bill. Well, wasn’t that what a certain Prof. Dr. Sinn always stated? Given the state of Italy (cf. here), this might prove to be one of the show-stoppers for the German economy in the not too distant future…. However, on a more positive note: the indebtedness of the German Federal Republic fell below Euro 2tn for the first time since ever.

Also, German unemployment-rate hit another low in May with 5.5%, the number of unemployed fell by another 25,000 to 2.473m (MoM) and by 142,000 (YoY). Given this development, it seems like a joke that one of the conservative party (CDU)’s aims in its election-program is „full-employment“…

Surprisingly and against the estimates of most pundits, German inflation slightly increased to 1,6% again, after 1,5% in May 2017. The increase is mainly attributed to higher food prices.

Given the ongoing strength of the German economy, it is no surprise, though, that insolvencies for corporations further decreased by 4.3% in the first quarter and even by 5.9% in the first half of 2017 (each on a YoY-basis).

Also, the German (Industrial) Purchasing Managers‘ Index (PMI) slightly further increased from 59.5 points in May to 59.6 points in June 2017, thereby reaching a 74-month high (that is more than 6 years!). And – also – the Ifo business climate index reached another all time high rising from 114.6 points in May to 115.1 points in June 2017 (from the press-release: „Sentiment among German businesses is jubilant.“). The ZEW Indicator, too, gained another 4.1 points from 83,9 points in May to 88.0 points in June 2017.

Hence, overall, another strong month lies behind the German economy – although not all previous records were broken (again), in particular regarding exports. However, given not only the political issues around the world (Quatar, North Korea, to name only the most critical ones) and the ongoing banking crisis within the Euro-Zone (cf. Italy or Spain) or the growing avalanche of „Carmageddon“ in the US, the German economy is going very strong into the summer.

CU next month!

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