Carsten Brzeski, Chief Economist at ING, notes that Germany’s Ifo index joined the choir of disappointing sentiment indicators in October, dropping to 102.8, from 103.7 in September.
Key Quotes
“The decline was mainly driven by weaker expectations (from 101.0 to 99.8). The current assessment component is holding up relatively well, decreasing only marginally to 105.9, from 106.4 in September.”
“Stock markets, the Eurozone and the German economy, are all seeking guidance.”
“In fact, today’s Ifo index is a perfect illustration of the current dichotomy between increasing fears about the future and solid growth at present. The high current assessment component points to continued strong growth at the start of the final quarter of the year, while weaker expectations perfectly illustrate increased worries.”
“The Ifo index for the manufacturing sector has dropped since the start of the year, while at the same time, an inventory built-up in recent months combined with less new orders doesn’t bode well for industrial production in the months ahead.”
“Having said this, there is no reason, yet, to fall into severe depression.”
“All of this means that the uncertainty and the unpleasant gut feeling will continue. At the same time, however, the present situation of the German economy is still better than the recent stock market correction might suggest.”
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