The German economy in August 2018 – only a summer break?


Again, it is not really easy to discern a clear picture of the German economy’s status in August. Probably due to the holiday season (which extended until late August), the statistics might, as in July (cf. here), prove to be somewhat misleading:

The German DAX could not keep his gains from the previous months, but rather resumed its losing streak: After closing at 12,805 points on 31 July 2018, the index closed at 12,364 points on 31 August 2018.

German exports, after gaining an already incredible 7.8% (YoY) in June 2018 (though remaining stable only on a monthly basis), repeated the exercise in July with another gain of 7.6% (YoY, though losing -0.9% MoM!). Germany’s industrial production’s roler-coaster ride still continues: After losing -0.9% (MoM) in June, they declined by another -1.1% (MoM, but gained another 1.1% YoY!) in July 2018. German industrial orders, also continued their declining streak and fell by another -0.9% in July 2018 (YoY and MoM), after already losing -4% (MoM; -0,8% YoY) in June 2018.

The German Target 2 balance, after declining by Euro 63 Billion in the previous months, only shed some hundreds millions in Augst and reached Euro 912,5 Billion in August 2018.

Again due to the holiday season, German unemployment-rate moderately rose by another 0.1% from 5.1% in July to 5.2% in August 2018, the number of unemployed rising by around 26,000 (MoM), but falling by another 194.000 (YoY) now reaching 2.351m.

Corporate Insolvencies in Germany are still on a decline: In the first half of 2018, their number decreased by a further -2.5% and even on a monthly basis the figures declined by another -0.8% between May and June 2018.

The German inflation-rate, again, remained steady at 2.0% (MoM) also in August 2018.

The leading German sentiment indicators are not in sync for July 2018: The German (Industrial) Purchasing Managers‘ Index (PMI) gained, from 55.9 points in July to 56.9 points at the beginning of August and then decreased again to 55.9 in the beginning of September 2018. There against, the Ifo business climate index strongly increased from 101.7 points in July to 103.8 points in August 2018. The ZEW Indicator, after a sharp drop from June to July, only slightly decreased from 72.4 points in July to 72.2 points in August 2018.

While the articles of a coming recession keep piling up (not only) in the German media, the statistics are not so clear. However, especially, the (even if small) further decline in industrial orders might indeed correlate with the continued crisis of the emerging markets and prove to be an early indicator for a manifest indicator. We will look into that in the next month.

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