Germany: More signs of bottoming out – ING

The latest Ifo index adds to latest signs of a bottoming out of the German economy. However, bottoming out still does not mean a rebound, explains Carsten Brzeski – Chief Economist at ING Germany.

Key Quotes:

“The economy’s balancing act between solid consumption, services, public expenditures and construction on the one hand side, and weak activity in manufacturing on the back of trade uncertainty and weakness in the automotive sector on the other hand side continues. Particularly the manufacturing sector has made a significant u-turn since mid-2018; unfortunately for the worse. Back in the summer of 2018, slowing activity in the manufacturing sector was mainly the result of supply side constraints. Now the lack of demand has become a huge concern, as pressing as in 2010.”

“Looking at the Ifo index per sector shows that confidence in the service sector has deteriorated since the early summer, while at the same time confidence in the manufacturing sector is showing first tentative signs of bottoming out. However, order books in the automotive industry are still close to levels last seen in early 2013. High inventories and thin order books do still not bode well for the manufacturing outlook in the near term.”