Last month showed that Germany’s economy is not a European Champion anymore (here), and in June it does not really get better. But, hey, let’s take a closer look at how the German economy is faring:
Currently, no news on the development of German GDP are available.
The German DAX price index (for an explanation, why I prefer this index, cf. here) took a correction from previous ATH’s, starting at 7,152 points on 3rd June, reaching its low-point with 6,915 points on 14 th June and ending at 7,005 points on 28th June 2024.
German industrial orders again failed to meet expectations: after increasing by 0.2% (MoM, but still down by -10.6% YoY) in February, they continually decreased, first by -0.4% (MoM, -5.8% YoY) in March, by another -0.2% (MoM, still -1.6% YoY) in April and now by another -1.6% (MoM, even -8.6% YoY) in May 2024. The same goes for Germany’s industrial production: after +2.1% (MoM, but -4.9% YoY) in February, production decreased by -0,4% (MoM, even -3.3 YoY) in March, -0.1% (MoM, -3.9% YoY) in April and even by –2.5% (MoM, -6.7% YoY) in May 2024. Also, German exports reversed their previous positive path: after increasing by +6.3% (MoM, +0.3% YoY) in January, decreasing -2.0% (MoM, even -4.4% YoY) in February, again increasing by 0.9% (MoM, +1,2% YoY) in March and by a further 1.6% (MoM, 1.9% YoY) in April, exports decreased by -3.6% (MoM, -1.6% YoY) in May 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 increased by roughly Euro 84bn (!) in June 2024 and ended at Euro 1,090bn. The German inflation-rate is decreasing again: starting from its peak of 10.4% in October 2022, the rate first 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, re-decreasing to 2,9% in January 2024, 2.5% in February and to 2.2% in March , where it remained (2.2%) in April, increasing to 2.4% in May ad decreasing to 2.2% in June 2024 (each YoY). However, the decreasing inflation does not really seem to reach the consumers‘ pockets (here, in German)
There is no sign of „spring break“ in the air within the German Labor market, au contraire, the unemployment rate ROSE in June, though only by 4,000 (MoM, but 172,000 YoY!), hence, the unemployment rate, which stood at 5.8% in May, remains at 5.8% in June 2024 (all MoM). German insolvency filings increased for the 14th time in a row, albeit not in the two-digits like in the previous months: 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, 18.1% in February, 12.3% in March, 28.5% in April, 25.9% in May, filings increased by a „mere“ 6.3% in June 2024 (all YoY; cf. my most recent comment, here, in German).
The leading German sentiment indicators, were, once more, in sync: The German (Industrial) Purchasing Managers’ Index (PMI) lost 1.9 points and stood at 43.5 points on 1st July 2024. The ZEW Indicator (for the current situation) lost 1.5 points and was at 73.8 points in June 2024. Only the ifo Business Climate Index lost 0.7 point and ended at 88.6 points in June 2024.
To sum up: Really bothering is that all „hard“ KPI (namely orders, production and export) are again and „in sync“ in negative territory as well as the sentiment indices- at a time of the year they should normally be thriving. Hence, not only does German soccer do not rule Europe (as hoped for in my last column, here), but also the German economy is not really coming off the ground – or the hole that it has been digging itself into for the last years.
This „hole“ consists of myriads of structural deficits (cf. here for a short summary, in German). Such problems will not go away anytime soon, hence, I would rather not bet on a substantial recovery in the remain of the year.