The German Economy in January 2018 – no breathtaking…


Due to my annual skiing-holidays, I am a little late with my January monthly and thus had to watch in awe the stock exchanges crashing all over the world. Currently, the search is ongoing for the reasons of this crash. I will dwell deeper into this in the next month. Before, let’s look back into January – where the GroKo was still under construction and the German economy seemed to happily hum along: 

The German DAX, did slightly better in January than in the previous month, although going on a roller-coaster ride throughout the month: After closing at 12,917 points on 29 December 2017, the German DAX started the year with 12,871 points on 2 January and – after climbing to 13,599 points on 23 January – closed the month with 13,189 on 31 January 2018. The overall gain of 318 points has in the meantime already vanished – but we will come to that in the next month.

Unsurprisingly, German exports played a major role for the continous records set during the last year: With exports amounting to over Euro 1,279 Billion, another landmark record was set in 2017. However, since imports also rose considerably, the net export surplus declined for the first time since 2009.

Although the German unemployment-rate rose from 5.3% in December 2017 to 5.8%, the number of unemployed rising by around 185,000 (MoM) but falling by another unbelievable 207,000 (!) on a YoY-basis, now reaching 2.57m. These are figures last seen 25 years ago.

Again, the German inflation-rate decreased from 1.7% in December 2017 to 1.3% in January 2018 (MoM). Accordingly, pundits do not see the inflation-rate reaching the 2.0% target set by the ECB. Given the recent decline in oil-prices, this estimate might indeed prove to be correct.

The number of Corporate insolvencies in Germany – after their „crash“ in September 2017 of -14.2% (!) (YoY) – rose by 1.0% in October and by another 5.6% in November 2017. For the time being, I would not call this a reversal of the current trend – rather another statistical glitch. What is more troubling, though, is that the average recovery for debtors further declined to now 2.2 cents in the Euro.

The German Industrial production, after declining by -1.4% in October, rose by 3.4% in November before declining by another -0.7% in December 2017 (cf. here). There against, new orders for December 2017 increased by 3.8% (MoM). This should be a decisive signal for a strong economy also for the coming months.

However, the German (Industrial) Purchasing Managers‘ Index (PMI) – after setting another record with 63.3 points in December 2017 – declined to 61.1 points in January 2018. The Ifo business climate index rose from 117.2 points in December 2017 to 117.6 points in January 2018. Also, the ZEW Indicator further rose from 89.3 points in December 2017 to unbelievable 95.2 points – thereby reaching an all-time high since the beginning of this index in 1991.

To wrap the January up in one sentence: „Weiter so!“ (For all non-speaking readers: this is the motto of Mrs. Merkel and might aptly translated with „Keep calm and carry on!“) So, despite a lack of government, the German economy is going about its business – and growing.

CU next month!

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