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Carsten Brzeski, Chief Economist at ING, explains that the Germany’s most prominent leading indicator, the Ifo index, dropped only slightly in September to 103.7, from a revised 103.9 in August.

Key Quotes

“Both the expectation and the current assessment component weakened somewhat. Still, the absolute level of all components points to continued strong growth for the economy as a whole in the months ahead.”

“It seems as if the Juncker-effect lives on. Remember the late-summer visit of European Commission president Jean-Claude Juncker to Washington, D.C., had taken the EU off US trade war radar screens.”

“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.”

“Looking ahead, the rollercoaster ride of the economy, or at least of high frequency macro data, will continue.”

“All in all, we expect the seesaw of disappointing and impressive macro data to continue. Maybe this is simply what characterises a late-cycle economy, which balances between external risks, strong economic fundamentals and increasing domestic political tensions.”