Schlagwort: Target 2

As expected, German GDP has shrunk by -0.2% in 2024, a phenomen which last occured in 2002/2003. And – although some pundits still hope for a meagre growth in 2025 (cf. here for an overview) – my forecast is that Germany’s economy will again decline in 2025 – and probably by more than -1%.

The German DAX price index (for an explanation, why I prefer this index, cf. here), did lose some ground in October and also „enjoyed“ a nice roller coaster ride, starting at 7,657 on 2 Deczember, rising to 7,847 points on 12 December before crashing to 7,625 points on 23 December, ending the month with 7,348 points.

German industrial orders lost further ground: after increasing by +3.9% (MoM, but still -11.8 YoY) in June and by +2.9% (MoM and also by +3.7% YoY) in July, orders declined by -5.8% (MoM, -3.9% YoY) in August, before again gaining 4.2% (MoM, also +1.0% YoY) in September, decreasing by -1.5% (MoM, but +5.7% YoY) in October and now by -5.4% (MoM, -1.7% YoY) in November 2024.

There against, Germany’s industrial production seems to experience some kind of „autumn boom“ after all: after increasing by +1.4% (MoM, but still -4.1% YoY) in June, again decreasing by -2.4% (MoM, even -5.3% YoY) in July, before again increasing by 2.9% (MoM, but -2.7% YoY) in August, production sank by -2.5% (MoM, even -4.6% YoY) in September and by another -1,0% (MoM, even -4.5% YoY) in October, but gained +1.5% (MoM, but still -2.8% YoY) in November 2024.

Also, German exports increased: after decreasing by -3.4% (MoM, even 4.4% YoY) in June before increasing by +1.7% (MoM, but still -1.2% YoY) in July and by a further 1.3% (MoM, +0.1% YoY) in August, exports again decreased by -1.7% (MoM, -0.2% YoY) in September and by another -2.8% (MoM, -2.8% YoY) in October before increasing by +2.1% (MoM, but -3.5% YoY) in November 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 lost around Euro 20bn (!) in December 2024 and ended at Euro 1,046bn. The German inflation-rate rose and not really insignificantly: starting from its peak of 10.4% in October 2022, the rate decreased to finally 1.6% in September but has sice re-increased to, first, 2.0% in October, then 2.2% in November and now 2.6% in December 2024 (each YoY).

The German Labor market showed the usual seasonal development: After the unemployment rate rose to 6.1% in August and declined slightly to 6.0% in September, it remained at 6.0% in October, declined to 5.9% in November and rose to 6.1% in December 2024 (all MoM). There against, German insolvency filings now increased for 19 uninterrrupted times in a row until: 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, a „mere“ 6.3% in June, 13.5% in July,  10.7% in August, 13.7% in September, 22.9% in October ad 13.8% in December 2024 (all YoY; cf. my then most recent comment, here, in German).

The leading German sentiment indicators, were, all in sync: The German (Industrial) Purchasing Managers’ Index (PMI) declined by 0.5 points and stood at 42.5 points on 2 December 2024. The ZEW Indicator for business expectations gained 8.3 points to 15,7 points in December 2024. There against, the ifo Business Climate Index lost a further 0.6 points and ended at 84.7 points in December 2024. The GfK-consumer index, again decreased by 4.7 points to -23.1 points in December 2024.

To sum up: Germany’s hard KPI are a mixed bag – some late „autumn boom“ (production, exports) already overshadowed by another blow to orders. Consumers‘ sentiment declining just before Christmas – normally the season with the highest retail-turnover already foreshadowed the indeed at best mediocre outcome of Christmas shopping (here, in German). Despite increasing wages (here), Germans choose to save money instead of spending. And probably, righfully so:

A year ago I predicted that 2024 will put an end to the illusion of Germany’s prosperity as narrated in the 2010’s (cf. here). And – despite the concrete figures not materialising as bad as I thought – how right I was! Well, to be fair, it did not need real witchcraft to read this into the glas bowl. And it is not very difficult to predict that the German decline will continue through 2025. While the German population has probably understood the message, German politicians, in the run-up to the Bundestagswahl on 23 February 2025 still outdo one another with promises how to increase welfare – for them, the illusion is still alive and kicking it seems. 

So, I am behind everything – due to the worsening economic situation in Germany I did not only have not time to write my ususal monthly before Christmas, but also not over Christmas! Hence, with the ususal apologies and without further adue I jump right in, where I left in November (here):

„The German economy in November 2024 – behind the curve“ weiterlesen

Just after I sent out my last monthly (here), Destatis announced that at least in the third quarter, Germany’s economy experienced a slight growth (here). So, not all is bad in Germany? Well, let’s see and take a closer look on how Germany’s economy fared in October:

„The German economy in October 2024 – nothing goes to heck in a straight line“ weiterlesen

While I had still some hope left for an autumn upswing at the end of last month (here), that hope is now totally gone. But hey, let’s take a closer look on how the German economy fared in September 2024 in order to find out why: 

„The German economy in September 2024 – the end of the beginning“ weiterlesen

After observing that Germany’s „hard“ KPI were southbound in June, all eyes are now on the development in July. So, hey, let’s take a closer look how the German economy fared in July:

„The German economy in July 2024 – summertime blues?“ weiterlesen

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:

„The German economy in June 2024 – „hard“ KPI’s southbound“ weiterlesen

Although quite a formidable phalanx of pundits indeed see the German economy „coming out of the woods yet“ (cf. my last monthly, here), not only the mood but also the current figures are not really champion-like. But, hey, let’s dive deeper into the facts:

„The German economy in May 2024 – not really a European Champion“ weiterlesen

Well, „subdued“ – the term I used in my last issue (here) – was the correct description of Germany’s economy as it turns out now. But, hey, let’s look at the current stage in more detail and assess how it will develop:

„The German economy in April 2024 – out of the woods already?“ weiterlesen

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:

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