EMU economic indicators

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German ifo business climate (July): down

Mon, Jul 21 2008, 10:20 GMT
by BHF-Bank Economics Department

BHF-Bank


  • RBS PMI manufacturing indices Germany and EMU (July): down

  • M3 growth (May): marginally slower at 10.4% yoy

In July, the German ifo business climate index will probably have continued deteriorating. The US ISM manufacturing index improved slightly, but the German ZEW economic sentiment plummeted. Moreover, the euro has remained strong and the German yield spread has deteriorated recently, as long-term interest rates have gone down and short-term ones up. The crude oil price has soared and the DAX performance index has decreased.

Info Business Climate

In view of the above, the RBS purchasing managers’ index for the German and the EMU manufacturing sector, Belgian and French business confidence are all likely to have deteriorated in July, while Italian business and consumer confidence could have stabilized, after the steep drop in June. French consumer spending is expected to have suffered a setback in June, after it had soared unexpectedly and because French consumer confidence had deteriorated.

EMU industrial new orders are expected to have decreased in May, after they had soared unexpectedly and because the corresponding German figure dropped. The EMU current account is likely to have decreased in May, following its usual seasonal pattern and just like the corresponding German figure.

M3 showed robust growth in May. Nearly €70bn of fresh funds were channeled into monetary assets; about €31bn went into time deposits, another €31bn were invested in money market funds and short term securities. Overall, M3 growth was unchanged at 10.5% yoy. As short term interest rates have remained relatively attractive in June, and stock prices plummeted, we expect M3 growth to remain strong. The annual rate is likely to ease only slightly to 10.4%.

Published on  Mon, Jul 21 2008, 13:07 GMT

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