Economy

Inflation rate in EMU just above zero – negative values expected in the second half of the year

According to Eurostat’s provisional calculation, the upswing in consumer prices in the euro zone remained only moderate in June. The inflation rate, measured by the Europe-wide harmonised consumer price index (HICP), was 0.3 percent in June according to the provisional calculation. Thus, the rate was slightly higher than in the previous month at 0.1 per cent. At the same time, the high inflation of food prices eased somewhat and energy prices were again significantly lower than a year ago. For other services and goods prices, the upward trend in prices remains positive but moderate. Due to the corona crisis it was still not possible to collect all price data. In June, a total of 11 percent of the relevant data had to be estimated. This results in a certain error-proneness of the data. At the country level, the inflation rate in Germany rose from 0.5 to 0.8 percent. In France,…

China: More and more signs of recovery

  In most areas of the Chinese economy, signs of recovery now predominate. Not only do the survey results now signal growth again, but the „hard“ economic indicators have also turned to a recovery path. Industry has returned to its pre-crisis level and has been in the black since April. Even a slight increase in profits has now been reported. The retail sector has at least narrowed the gap to last year, at least noticeably, to which the strong sales of car dealers in recent weeks have contributed in particular. In fact, they were able to completely make up for their 80-percent decline from February. There is thus much to suggest that the figures on economic growth in the second quarter, which China will publish in about two weeks‘ time, will be good. Compared to the previous year, there should be a slight increase again, which would correspond to a…

So a V-shaped recovery after all?

  This week’s indicators: The ifo Business Climate Index rose more than ever before in June, and sentiment among industrial purchasing managers has rallied strongly and has recently been better than in Q4 2019. Given the still difficult situation of companies in many industries, these reports are surprising. So can we expect a rapid V-shaped economic recovery after all? The increase in business activity would be as rapid as the slump in March and April – the rapid recovery on the stock markets would have been a good harbinger of this. But there are some reasons why the rapid rise in sentiment indicators will not translate into a corresponding recovery in the real economy. For one thing, a purchasing managers‘ index in the 50 point range does not mean that the economy is back to „normal“. It merely indicates that there has been no further deterioration compared with the previous…

The car industry suffers from Covid-19 and structural change

  The automotive industry is suffering like hardly any other German industrial sector from the effects of the Corona pandemic. However, this is not only due to the reluctance of companies and consumers to make purchases, which can be observed during the crisis. Even before COVID-19, the industry was already in a prolonged crisis, quite in contrast to the financial market crisis, which had hit companies during a boom phase.

ifo Business Climate: „The strongest increase ever measured“.

  The mood in German companies continued to improve strongly in June. This is shown by the ifo Institute’s survey. The business climate index rose from 79.7 to 86.2 points, and the ifo Institute emphasizes that this is the „strongest increase ever measured“. But does this also mean that the real situation of German companies improved accordingly in June? Unfortunately, we cannot assume that this is the case. On the one hand, the recent rise in the business climate index is strongly related to expectations. In other words, companies are assuming that their sales or production will develop positively in the next six months – compared with the status quo. Given the still very difficult situation in most sectors, this assumption is certainly plausible. By contrast, companies are much more cautious in their assessment of the current business situation. The indicator for the current situation improved only slightly in June…

Purchasing managers‘ indices in the eurozone: Like Phoenix from the ashes?

  The mood among European purchasing managers improved significantly in June. The comprehensive Composite Purchasing Managers‘ Index on the common sentiment in the manufacturing and service sectors rose from 31.9 to 47.5 points. There was a clear upward trend in both the manufacturing and service sectors. As rapidly as the mood clouded over in March and April, it appears to have been on the rise again since May. One could almost think that the crisis is over. But the eurozone is still a long way from that. After all, gastronomy and accommodation as well as the leisure and tourism industry will continue to suffer from the distance and contact restrictions. The lockdown until May should ensure that EMU’s gross domestic product in the second quarter will decline by around 10 percent compared to the previous quarter. These losses will first have to be made good. German purchasing managers are also…

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