Germany: Relief from IFO index – ING

Carsten Brzeski, chief economist at ING, notes that Germany’s most prominent leading indicator, the Ifo index, increased for the first time in a year, coming in at 94.6 in September, from 94.3 in August.

Key Quotes

“While the current assessment component unexpectedly increased to 98.5, from 97.5 in August, the expectations component continued its recent fall.”

“A breather but no relief. The small increase in the Ifo index does not take away the fact that the German industry continues to suffer from structural changes and the ongoing trade conflict.”

“The likelihood of another contraction of the German economy in the third quarter and hence a technical recession increases almost by the day. While a “light” technical recession is not the end of the world for an economy which has been growing for more than ten years and has an unemployment rate at all-time lows, it is the lack of any signals of an imminent rebound which is more concerning. Calls for government action will continue.”

“As much as we would like to see an end to the downward trend in the German economy, today’s Ifo index is not the indicator signalling it. It’s a short breather, which keeps both the hopes for a bottoming out as well as the fears of another downward slide alive.”