Germany: a glimmer of hope for industry

Chart of the week

Although October’s manufacturing PMI has inched up from its September low, 42.1 is a level that clearly indicates contraction and had not been seen since 2009.

That said, September’s manufactured goods orders are sending a slightly more positive message, posting a monthly rise of 1.3%. When volatile components are excluded, the number increases to 1.5%, in line with the stable pattern of recent months at levels seen in 2015–16. Capital goods orders have been contributing significantly to the rise.

OUR ANALYSIS

September’s drop in industrial output creates a real risk that third-quarter growth will be negative, following a contraction in the second quarter.

Although the PMI new orders component remains very low, October’s IFO index revealed a more marked upturn. This upturn could gain pace given the more positive outlook in terms of both Brexit, with a lower probability of a no-deal exit, and the US-China trade war, with an agreement appearing more likely.

If manufacturing activity stabilises, as the upturn in orders perhaps suggests it could, then this will be very good news indeed for the German economy.

 

The opinion expressed above is dated 7 November 2019, and liable to change.

 

See also :

United States: A strikingly similar picture to 2016

 

This document is not pre-contractual or contractual in nature. It is provided for information purposes. The analyses and descriptions contained in this document shall not be interpreted as being advice or recommendations on the part of Lazard Frères Gestion SAS. This document does not constitute an offer or invitation to purchase or sell, nor an encouragement to invest. This document is the intellectual property of Lazard Frères Gestion SAS. LAZARD FRERES GESTION – a simplified joint stock company with share capital of €14,487,500 – Paris Trade and Companies Registry No. 352 213 599. 25, RUE DE COURCELLES – 75008 PARIS, FRANCE


-- PDF --


Published by

mm

Julien-Pierre Nouen

Directeur des études économiques et de la gestion diversifiée