The German Economy in November 2017 – No Worries!


Despite (or because of?) a political turmoil after the failed „Jamaica“-coalition talks in Germany (others would say: normal political circumstances), the economy is doing quite well, even if the DAX showed some weakness in November:

The German DAX went on a roller-coaster during November: After closing at 13,229 points on October, 30th, the index lost over 200 points and closed at 13,023 on November, 30th 2017. However, in between it reached nearly 13,500 points in mid-November. Looks like there will be an interesting run-up to the year-end.

German GDP grew by another 0,8% in Q3/17. Again, German exports paved the way for the growth: Particularly positive to note is that the German industry is spending on Capex: According to ifo, the spending increased by 1.5% (against the previous quarter). In again reversing the trend, the German Target-2-balances in October (latest available figures) decreased by more than Euro 30bn! from Euro 879bn in September to Euro 848 bn in October 2017 (cf. here). Did not see this one coming…

The German unemployment-rate reached new lows from 5.4% in October to 5.3% in November 2017, the number of unemployed falling by another 20,000 (MoM), 164,000 (YoY) respectively, staying overall well below 2.4m. This is a new record after the German re-unification in 1990.

The German inflation-rate slightly increased again from 1.6% in October to 1.8% in November 2017 (MoM). As already „promised“ in previous posts, the inflation is likely to further rise – even if oil is not getting more expensive: due to the bad harvesting data after some thunderstorms and frostbite in Germany, this level will be held, if not increased in the months to come.

Corporate insolvencies in Germany – after a nearly 10-percent decline in July – were somewhat slower declining, with „only“ 4.3% less insolvencies in August 2017 on a YoY-comparison.

German Industrial production, after increasing by 2.6% in August, surprisingly, fell by -1.6% in September 2017. And, while new orders for July were upped from 3.6% to 4.1%, they merely grew by 1.0% in August (MoM). Surely an indicator to watch in the months to follow… Also, Car sales in Germany (after a decline of 3.3% in September) gained another 3.6% in October 2017 (YoY), though new Diesels went off the cliff.

However, according to German managers, there seems to be no cloud on the horizon: The German (Industrial) Purchasing Managers‘ Index (PMI) rose from 60.6 pointsin September to October to 62.5 points in October 2017. This was the highest level since February 2011 and the second-best since the survey began in 1996. Also, the Ifo business climate index, rose from 116.7 points in October to a new record-high of 117.5 points in November 2017. The ZEW Indicator also rose from 87 points in October to 88.8 points in November 2017.

Again (and I know, this is getting really boring), as predicted in the previous month (cf. here), the November figures are indeed better than the October figures and the figures for next month… Ok, I will stop here.

Let us hope that the year ends well – even without an elected government and without a war breaking out.

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