Germany

EMU Purchasing Manager: Second wave depresses the mood among service providers – Industry proves robust

Uncertainty is increasing among European service providers due to the rising number of infections in October. The tightening of corona protection measures is causing the purchasing managers‘ index for the service sector to fall significantly. In some countries, the catering and accommodation sectors are noticeably restricted. In addition, there are in some cases night-time curfews. With Ireland and the Netherlands, two countries are already in a kind of lockdown. This leaves traces and puts pressure on the sentiment among service providers. In industry, on the other hand, the sentiment measurement figures may even increase and prevent worse for the overall picture. According to IHS Markit, the comprehensive composite index from both sectors fell from 50.4 to 49.4 points in October. At the beginning of the fourth quarter, the growth prospects for the euro zone thus deteriorate. As there is no end in sight to the rising infection figures, further intensification…

Youth unemployment is becoming a problem in the euro zone

The corona virus caused severe economic setbacks in economies around the world in the first half of the year. In the euro zone, extensive measures were at least able to protect the labor market from more serious distortions. But things are by no means going equally well for all age groups. Particularly in the group of under 25-year-olds, a fairly rapid increase in the EMU unemployment rate has been recorded since the lockdown measures starting in March. One of the reasons for the rapid deterioration in youth unemployment is the fact that companies in Corona times provide significantly fewer training places due to increased uncertainty. This poses a particular challenge to all those who left school after graduating in Corona summer and find it difficult or impossible to find an apprenticeship. In addition, fixed-term employment contracts are hardly ever extended in these uncertain times. The danger here is that these…

Germany with a backlog of investment in software and databases

The international success of digitization is reflected primarily in investments in software and databases, but also in investments in research and development (R&D). Since the 1990s, investment in these two segments has also grown at an above-average rate in Germany, proving to be relatively crisis-resistant, quite in contrast to investment in equipment. In the second quarter of 2020, i.e. in the midst of the corona crisis, they even managed to grow overall compared with the previous quarter, as the only component of German gross domestic product apart from government consumption. In an international comparison, investments in R&D in Germany are of above-average importance for the gross domestic product. In many other countries, however, investments in software and databases play a far greater role than in Germany. Compared with the United States, but also with the United Kingdom, for example, Germany still has a considerable amount of catching up to do…

DAX soon in a new guise?

Deutsche Börse has launched a survey on the further development of the DAX. This is intended to eliminate various points of criticism, some of which have been around for a long time or were revealed in the course of the Wirecard insolvency. The central issue is a possible expansion of the DAX from 30 to 40 index members. The DAX40 should thereby better reflect the corporate landscape in Germany. Nevertheless, although the number of companies in the DAX40 would increase by 33%, the share of new companies would only be 8%. The sector composition would also change only slightly. Industrial, automotive and chemical groups should continue to dominate the picture. Nevertheless, the share of dynamically growing companies in the further developed index would increase. The DAX would be larger, more modern and more diversified. In addition, the new rules and quality standards should create opportunities to react more quickly to…

Construction boom supports the German economy

The fact that the German economy did not slide even deeper into recession because of the Corona pandemic is due not only to government consumption, but above all – in contrast to other countries such as the UK – to the pleasing development of the construction industry. It is true that construction investments also declined this spring. However, this was not due to the corona crisis, but to the extremely positive performance in the first quarter. In the first half of 2020, construction investments increased by 3.2 percent in real terms and by as much as 6.3 percent in nominal terms compared with the same period in the previous year. By way of comparison, investment in machinery and equipment slumped by 18 percent in nominal terms and by over 19 percent in real terms in the same period. The importance of construction investments for the German economy thus continued to…

German savings rate shoots up to over 20 percent in Q2

In „normal times“, the savings rate of private households in Germany follows a seasonal pattern: in the first quarter – after Christmas and before the vacation season – citizens put a high proportion of their income on the high side at an average of just over 14 percent, while the savings rate in the following quarters is significantly lower at around 9 to 10 percent. As a result of the Corona crisis, however, the usual pattern is being seriously disrupted this year. Already in the first quarter, the savings rate of 16.5 percent was significantly higher than in previous years, and in the second quarter it even shot up to 20.1 percent. The reasons for this are to be found in the fear of income losses due to short-time working or unemployment, in lockdown and travel restrictions, which massively impeded private consumption, especially in the first half of the second…

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