The German economy in January 2021 – not too bad of a start…

The December 2020 / year-end figures did not look too bad (cf. here), but how will the German economy fare in the ongoing lockdown? Let’s look into the German economy in some more detail for that:

Further incoming figures confirm that the German GDP, has even shrunk less than by -5.0% in 2020 (not 2021 as I accidently wrote) as originally indicated but „only“ by -4.9% (cf. also here, in German) and even grew by a somewhat „solid“ (given the lockdown) 0.3% in the fourth quarter – so not a bad sign.

The DAX, however, after reaching its monthly peak with 14,089 points already on 8 January 2021 then lost some considerable 657 points and ended at ended at 13,432 points on 29 January 2021.

German industrial orders – after having risen by 1.5% (MoM) in October and by 2.3% (MoM, and also 6.3% YoY!) in November – really had a setback with -1.9% (MoM; but still up 6.7% YoY!) in December 2020. Germany’s industrial production, which still gained 0.9% in November (MoM, -2.6 YoY), only remained unchanged in December 2020 (MoM, -1.0% YoY). Also, German exports slowed down, from some 2.2% growth (MoM; still down -1.3% YoY), slowed down to a meagre 0.1% (MoM, but +2.7% YoY) in December 2020.

The German Target 2 balance decreased by some Euro 82bn compared to the Euro 1.154 Trillion in December 2020 and thus declined to Euro 1,054 bn in January 2021. But, holyshmoly, the ECB’s efforts seem to work, because German inflation-rate, rose from a negative -0.3%, in November to a respectable 1.0% in January 2021 (each MoM).

The German labor market, which had surprised earlier with an only modest rise in unemployment by only 8,000 in December 2020 (MoM, but 480,000 YoY), now hit the usual winter blues with some 193,000 unemployed added now totalling 2.901m unemployed at a rate of 6.3%. German corporate insolvencies, again, continued their relentless crash and – after a decline of -31.9% in October (YoY) – the number decreased by another -26% in November 2020 (again YoY).

The leading German sentiment indicators, are now rather inconsequential on the consequences of the next lockdown: while the German (Industrial) Purchasing Managers’ Index (PMI), lost a considerable 1.3points and ended at 57.0 points on 1 February 2021, the ZEW Indicator (for the current situation) remained largely unchanged with 66.4 points in January 2021. The Ifo business climate index, lost some 1% and fell from 92.1 points in December 2020 to 91.1 points in January 202.

To sum up: Although „Lockdown 2.0“ seems to take its toll on the German economy, the effects are far from the ones feared – until now. Hence, the start into 2021 has not been too bad, let’s keep our fingers crossed that the German vaccine-desaster will not have too much of a negative effect then.

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