The implicit forecast of my last monthly report, „southbound“ (cf. here) has not really materialised in November. Although leading pundits reduced their forecast for German growth and the DAX did lose another roughly 200 points, exports remain rather strong, jobless-figures are unbelievably low, etc. Hence, also the decline takes some time. But see for yourself:
Germany’s GDP, after shrinking by -0.2% in the third quarter of 2018, is predicted to rise by 0.3% in the fourth quarter 2018. All in all, Germany’s economy shall grow by 1.5% this and up to 1.9% in the next year (here).
In sync with the GDP, the German DAX maintained its downward path, though with reduced speed, and lost another 190 points over the month: After closing at 11,447 on 31 October, the DAX closed at 11,257 on November, 30, 2018 (here).
German exports, after gaining more than nine (9!) per cent in two months (July 2018: +7.6%; August 2018: +2.2% (all YoY)), lost -1.2% in September but regained their footing with +8.5% (all YoY, the spread rather indicating a statistical glitch…), the pundits debating whether this development is an indicator for a strong (here) or rather a weak (here) year for exports. The German Target 2 balance, were stated at Euro 941 Billion on 30 November 2018.
There against, Germany’s industrial production, which registered a small growth of +0.2% (MoM, +0.8% YoY) in September, resumed its declining path of the previous months (-0.9% (MoM) in June, -1.1% (MoM, but +1.1% YoY) in July and -0.3% in August (MoM) with a loss of -0.5% in October 2018. There against, German industrial orders, after rising by 2.0% (MoM) in August and +0.3% (MoM; but declining by 2.2% YoY) in September , gained another +0.3% in October 2018 (MoM; however losing -2.7% YoY).
After already falling to record-lows in the previous months, the German unemployment-rate further fell from 4.9% in September to 4.8% in October 2018 – the smallest figure since… ever. Also, corporate insolvencies in Germany again declined not only in September (-8.1%), but also in the first three quarters of 2018 combined (by 3.0% cf. here). German inflation-rate, after rising to 2.5% in October, moderately declined to 2.3%in November 2018 (all YoY).
The leading German sentiment indicators are southbound for November 2018: While the German (Industrial) Purchasing Managers‘ Index (PMI) decreased from 52.2 pointsin the beginning of November to 51.8 points in early December 2018, the Ifo business climate index further decreased for the third consecutive month from 102.8 points in October to 102.0 points in November 2018. Also, the ZEW Indicator decreased from 70.1 points in October by more than 11 points to 58.2 points in November 2018. The decline in these sentiment indicators show that the idea of a crisis begins to sink in with the German managers.
To sum up: While politicians – not unlike in a „cage of fools“ – stumble through probably the most important phase of world politics since the Second World War, the German economy is apparently not yet so sure where it is going. Though, the sentiment indices are going south in sync, the hard facts look very positive, at least for Germany. Worldwide, however, some key indices have been falling drastically for quite some time: the Philadelphia Semiconductor Index, the copper price or the oil price, for example. In other words, things are (still) looking good for Germany, but less so for the global economy. And this development will not leave Germany as an exporting nation unscathed. But, as stated at the beginning, the dive will take its time.