The German economy in March 2024 -„subdued“ is the term u r looking for

While starting to write this monthly, I realised that one of the first sentences of my last one ended in nirvana („… it seems that the roller-coaster …“, here) Well, unintend pun that was. But, hey let’s take a more closer look at how the German roller-coaster, aka „economy“ fared in March:

Germany’s BIP indeed seems to go to heck in a straight line: Even the „Wirtschaftsweise“ are only foreseeing a „growth“ of 0.1% in 2024 (here), while the IMF reduced its forecast to 0.2% (here). While these new predictions are errring near statistical misreadings already, I bet that they are nevertheless way to optimistic. But, who am I?

Meanwhile, the German DAX price index (for an explanation, why I prefer this index, cf. here) continued its rally, starting at 6,994 points on 1st March, and ended significantly higher at 7,293 points on 28th March 2024, marking another ATH on a nearly daily-basis.

At first sight, German industrial orders seem to have recovered a bit: after gaining +0.3% in November 2023 (MoM, -4.4% YoY) and even 8.9% (MoM, +2.7% YoY!) in December 2023, orders decreased by -11.3% (MoM; -6.0%  YoY) in January, but increased by 0.2% (MoM, but still down by -10.6% YoY) in February 2024. However, the accompanying press statement also states: „However, the increase is mainly due to a large-scale order in December. When large-scale orders are excluded, new orders were down 2.0% in the period from December 2023 to February 2024 compared with the three months before.“ Hence, much less recovery than hoped for. Also, Germany’s industrial production regained some more: after -0.7% (MoM, -4.8% YoY) in November and -1.6% (MoM, even -3.0% YoY) in December 2023 and +1.0% (YoY, but still -5.5% YoY) in January, production increased by a further +2.1% (MoM, but -4.9% YoY) in February 2024. There against, German exports halted their latest recoverty: after +3.5% (MoM, but still -5.0 YoY) in November, -4.6% (MoM, equally -4.6% YoY) in December 2023, +6.3% (MoM, +0.3% YoY) in January, exports decreased by -2.0% (MoM, even -4.4% YoY) in February 2024. For other German KPI’s, I refer you to the „Destatis Deutschland-Dashboard“ (here) and the „Data Commons (Germany)“ (here).

The German Target 2 balance decreased by roughly Euro 10bn in March 2024 and ended at Euro 1,065bn. The German inflation-rate continued its decline in January: starting from its peak of 10.4% in October 2022, the rate started to decrease, first to 10.0% in November, to 8.6% in December 2022, again increased to 8,7% in January (2023), where it remained (8.7%) in February, before slumping down to 7.4% in March and to 7.2% in April, before „crashing“ to 6.1% in May, going up again to 6.4%, decreasing to 6.2% in July and to 6.1% in August, even to 4.5% in September, to 3.8% in October and 3.2% in November, before re-climbing to 3.7% in December 2023, to 2,9% in January 2024, 2.5% in February and to 2.2% in March 2024 (each YoY).

The German labor market had a „subdued start to the spring recovery“ as the Bundesagentur für Arbeit aptly put it: the unemployment rate – after 5.7% in December 2023, a jump by 0.4% to 6.1% in January and another 6.1% in February, unemployment decreased by -0.1% to 6.0% in February 2024 (all MoM). German insolvency filings increased for the eleventh time in a row: After 3.1% in May, 13.9% in June, 23.8% in July, 13.8% in August, 19.5% in September, 22.4% in October, 18,8% in November and 12.3% in December 2023, 26.2% in January and 18.1% in February, filings increased by another 12.3% in March 2024 (all YoY; cf. my most recent comment, here, in German)!

The leading German sentiment indicators, are, once more, not in sync: The German (Industrial) Purchasing Managers’ Index (PMI) lost another 0.6 points and stood at 41.9 points on 2nd April 2024. The ZEW Indicator (for the current situation) gained 1.2 points and was at 80.5 points in March 2024. Also, the ifo Business Climate Index, gained 3.1 points and ended at 87.8 points in March 2024.

To sum up: Given the recovery of two out of three sentiment indicators in March, we should see better „hard“ KPI for March in the next month. The emphasis lies on „should“, though. The DAX – which acutally prices in (the hope for positive) future KPI – has turned sour recently. Not a good sign, and not the only one. Hence, my reading is that we will see more „subdued“ actual figures for March, though not an outright decline – it’s still spring time.

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