After not too bad of a start into the year (here) hopes were (and are still) high that the German economy would have a a decent start into the year. However, as lockdown 3.0 looms (did we even get out of „2.0“?), are there now clouds appearing on the economy’s horizon? For that let’s take a more detailed view into the German economy:
The „five wise (wo)men“ (Wirtschaftsweise), who advise the government on the development of the German economy just lowered their expectations for the growth of the German GDP, from 3.7% as stated in autumn to now 3.1% (here).
Unshaken by this lowered expectations, the DAX, started at 13,622, reached its monthly peak with 14,109 points on 15 February, roughly held that level and ended at 14,012 points on 28 February 2021.
German industrial orders – after incurring a real setback with -1.9% (MoM; but still up 6.7% YoY!) in December 2020 – did not really get off the ground in January, too, with an increase of just 0.8% (MoM, no YoY-data!?!), only. Germany’s industrial production, is – after gaining a minuscule 0.9% in November (MoM, -2.6 YoY) which remained unchanged in December (MoM, -1.0% YoY) – now decreasing again substantially with -2.5% (MoM, -3.9% YoY). German exports, though, which had slowed down from some 2.2% growth (MoM; still down -1.3% YoY) in November to a meagre 0.1% (MoM, but +2.7% YoY) in December 2020, resumed a moderate growth with +1.4% (MoM, but still down -8.0% (!!!!) YoY) in January 2021.
The German Target 2 balance roughly remained on the same level, after Euro 1.054bn in January, it stood at 1,043bn at the end of February 2021. And, again, the German inflation-rate rose – from a negative -0.3%, in December 2020 and a respectable 1.0% in January – to a more than modest 1.3% in February 2021 (each MoM).
The German labor market, who added some 193,000 unemployed in January, then totalling 2.901m unemployed at a rate of 6.3%, roughly remained on the same footing in February 2021 and added some 4,000 unemployed; the total being now 2.905m unemployed, still 6.3% of the whole workforce. Despite March nearing its close, there are still no news on German corporate insolvencies, for December or the whole year of 2020, after the relentless crash of another -26% in November 2020 (YoY).
The leading German sentiment indicators, are still rather inconsequential on the consequences of the lockdown 3.0: While this month the German (Industrial) Purchasing Managers’ Index (PMI), gained a considerable 3.1 points and ended at 60.7 points on 1 February 2021, the ZEW Indicator (for the current situation) lost another 0.8 points (adjusted) and deteriorated from –66.4 points in January to -67.1 points in February 2021. The Ifo business climate index rose from in January 91.1 points (or 90.3 points (seasonally adjusted)) in January to 92.4 points in February 2021.
To sum up: Amid „Lockdown 3.0“ the German economy presents a mixed picture – the sentiment indicators are symptomatic to that. While it seems obvious that the German economy will probably not experience a strong recovery, exports – once more – seem to play their magic and drag the economy out of the worst. We’ll see whether this effect will gain strength while the rest of the world is getting out of the corona-mess.