•  
  • New York 18:55
  • London 22:55
  • Barcelona 23:55
  • Tokyo 07:55
  • Sydney 09:55

  • SignUp | Login

KBC News Picks

EMU: Good ongoing strength in German (and EMU) economy

Fri, Nov 24 2006, 08:50 GMT
by KBC Market Research Desk

KBC Bank  |  View company's profile


Vote:

0

0

EMU: Good ongoing strength in German (and EMU) economy

The European business sentiment indices showed that the economy maintains a very good underlying momentum and that until now it was little harmed by the US economic slowdown. It also seems more and more likely that the economy will withstand better than expected the fiscal tightening in a number of countries, with the German VAT tax increase the eye-catcher.

In Germany, the all-important IFO business confidence survey surprised on the upside, advancing for the second month following three consecutive monthly declines and matching now again the cycle high of 106.8, reached already in June and at that time suspected to have been the peak of the cycle. The rise of the headline index to 106.8 from 105.3 in October surpassed expectations for a marginal decrease. Also very favourable, it was driven by both the current situation sub-index (113.9 versus 111.8) and by the expectations index that picked up to 100.1 from 99.2 previously. The current situation index might have been positively impacted by consumers bringing forward purchases ahead of the VAT increase and so there was/is a suspicion that the strength in the IFO overstates the underlying trend. This was further underpinned by the expectation index that fell from March (105.6) to September (98.9). However, in the most recent two months, the expectation index rose to 100.1, showing that while the IFO may still overstate somewhat the underlying situation, the outlook for the German economy is rosy despite the upcoming VAT increase. Companies seem to look through this temporary setback and expect business activity to remain well supported.

Also in other EMU countries, like Italy, Belgium and the Netherlands, the business confidence surveys were good, showing only very marginal decline vis-à-vis October.

The breakdown of German GDP was encouraging too. In Q3, growth slowed to 0.6% Q/Q from 1.1% Q/Q in Q2, but the slowing was entirely the result of a fall in inventories. Private consumption increased a surprisingly strong 0.7% Q/Q, the fastest gain in about two years and it is likely that Q4 will be strong too, as consumers bring forward some purchases in Q4. Other details showed healthy investment growth and a positive contribution of net exports.

Published on  Fri, Nov 24 2006, 09:03 GMT


KBC Bank http://www.kbc.be/dealingroom | piet.lammens@kbc.be

Archive


Legal disclaimer and risk disclosure

This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
Vote:

0

0


Interested in forex trading? forex brokerage firms!


Forex Capital Markets, LLC (FXCM)
Contact the broker/FDM
Open a demo account
FX Solutions LLC
Contact the broker/FDM
Open a demo account
Saxo Bank A/S
Contact the broker/FDM
Open a demo account		Capital Market Services UK Ltd
Contact the broker/FDM
Open a demo account		Interbank FX, LLC
Contact the broker/FDM
Open a demo account

GET CASH BACK FOR YOUR TRADES!   Learn more about the Pip Rebate Program

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.

Any opinions, news, research, analyses, prices or other information contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

©2010 "FXstreet.com. The Forex Market" All Rights Reserved.