While the war at the eastern and southern front is still very much progressing in favour of the Ukraine, Russia, under the leadership of Mr. Putin has – seemingly over recognising that a military victory is not feasible – startet to destroy Ukraine’s civil infrastructure (for regular updates, cf. here, in German). Hope was already in short supply in July (cf. here) and everything seemed to be in dire straits in August (here). So, let’s take a closer look on how the German economy fared in September 2022:
With regard to Germany’s GDP , the question now is WHEN and HOW HARD the recession will hit the German economy. Already now some kind of „appeasement“ is starting, with authors trying to make us indeed „love the recession“ (here and here, in German). Other authors proclaim the de-industrialisation and demise of Germany (here and here, in German). Hence, optimsim all around
The German DAX managed yet another „crack-up-boom“ in September, this one, again, not really lasting long time: Starting at 12.713 points on 1 September, the index inially gained 471 points to 13,450 points on 13 September, before losing an incredible1,383 points and closing the month at 12,063 points on 30 September 2022.
Again, German industrial orders rose in August: after -2.2% (MoM; +2.9% YoY) in February, 0.6% (MoM; and even 20.7% YoY) in March, -2.7% (MoM; -6.2% YoY) in April 2022, 0.1% (MoM; -3.1 YoY) in May, declining by -0.4% (MoM; and even -9.0% YoY!) in June, 0.7% (MoM, 12,6% YoY) in July, they further increased by another 0.3% (MoM, 11.1% YoY) in August 2022. Germany’s industrial production, had a losing streak for the second month in a row now: after declining by -3.9% (MoM; -3.5% YoY) in March, rising by 0.7% (MoM, but -2.2% YoY) in April, and gaining 0.2% (MoM, -1.5% YoY) in May, a meagre +0.4% (MoM, but -0.5% YoY) in June, then losing -0.3% (MoM, -1,1% YoY) in July, it lost another -0.8% (MoM, +2.1% YoY, though) in August 2022. There against, German exports,now seems to take up a zig-zag-course with +6.4% (MoM; even +14.3% YoY) in February, -3.3% (MoM, but +8.1% YoY) in March, +4.4% (MoM, +12.9% YoY) in April), -0.5% (MoM, +11.7% YoY) in May, +4.5% (MoM, and even +18.4% YoY) in June, -2.1% (MoM, but still +14.3 YoY) in July, they grew by a modest 1.6% (MoM, 18.1% YoY) in August 2022.
The German Target 2 balance, rose by some Euro 21bn in the course of September 2022 and ended at Euro 1,266bn – which nevertheless seems to be another record-high (here, in German). The German inflation-rate, as I forecasted already for June (overlooking some gimmicks from the German government such as cheap public local transport tickets and allowances on gas) has now officially reached a two-digit-status: starting from 1.0% in January (2021) to 1.3% in February, to 1.7% in March, to 2.0% in April, to 2.5% in May, to 2.3% in June, to 3.8% in July, to 3.9% in August, to 4.1% in September, to 4.5% in October, to 5.2% in November and to 5.3% in December 2021, 4.9% in January (2022), 5.1% in February, 7.3% in March, 7.4% in April, and, after 7.9% in May, decreasing to „only“ 7.6% in May and even to 7.5% in June, again increasing to 7,9% in August 2022 (each YoY; cf. my evaluation here, in German). Since producer prices increased by another nearly 46% (after 46% in September), we can safely assume that the relentless rise of the German inflation figures will continue unabated in October (to recycle the phrase of last month).
Despite the continuing influx of refugees, the German labor market, which according to the German Department of Labor principally still keeps its robustness, the unemployment rate – after 5.3% in February, 5.1% in March, 5.0% in April, 4.9% in May, 5.2% in June, 5.4% in July and 5,6% in August, decreased by -0.2% to 5.4% in September 2022. (Applications to commence) business insolvencies in Germany also establish a statistical zig-zag-move:after a stark rise by 27% in March, a near-equal stark decline by -20.8% in April 2022, another more modest rise by 8.4% in May, then another decline by -7.6% in June, followed by another -4.2% decline in July and an incrrease by 6.6% in August, now really crashed by -20.6% in September 2022 (cf. my comment, here, in German).
The leading German sentiment indicators remained in sync for September (not a good sign, though): the German (Industrial) Purchasing Managers’ Index (PMI) decreased by 1.3 points and stood at 47.8 points on 3 October 2022. The ZEW Indicator (for the current situation) lost another 1.8 points and decreased to -47.6 points in September 2022. The Ifo business climate index, too, further fell to 84.3 points in September, down from 88.5 points August 2022.
To sum up: Looking at the hard kpi’s of orders, production and export, the downward trend does not seem to be too distinct. However, taking in the broader view with a two-digit-inflation rate and the constant fear of a complete breakdown of power-supply due to gas- and electricity shortages, even these – overall still slightly positive – figures will not turn the sentiment. The positive outlier – insolvency applications down by 20% – might either be explained by another statistical glitch or – worse – by the anticipation of entrepreneurs that the duty to file for insolvency will to a certain degree be lightened, a measure that was announced at the beginning of September (cf. my comments here, in German). There is no real panic in Germany, not for now anyway, but despair is brewing.