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EMU economic indicators

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German ifo business climate (June): improvement

Mon, Jun 22 2009, 08:05 GMT
by BHF-Bank Economics Department

BHF-Bank

• PMI manufacturing indices Germany and EMU (June): up

• German CPI inflation (June): Slightly positive

The preliminary results for national German CPI for June are due to be released on Friday at the latest. We expect German consumer prices to have gone up by 0.3 % month-on-month; the annual rate would then increase slightly to 0.1 %. The monthly inflation will have been mainly due to significant price increases for gasoline and heating oil. These products are likely to have pushed inflation up by about 0.3 percentage points. Increasing gas prices and decreasing electricity prices could have more or less cancelled each other out. Prices for package tours and accommodation services could have had a slightly positive impact on monthly inflation. On the other hand, clothing is likely to have had a dampening effect and food prices could have fallen further. As from July, year-on-year inflation is expected to fall into negative territory for some months.

In June, the ifo business climate for Germany might have risen more sharply than the previous month. The German ZEW economic sentiment and the US ISM manufacturing index have both improved. German yield spreads have widened somewhat, as short-term interest rates had been stabilising and long-term rates had been going up until recently. The DAX has recovered too on the whole. On the other hand, the euro has appreciated and crude oil prices had been increasing until recently.

For similar reasons, most of the other economic climate indicators in the EMU – Belgian, French and Italian business confidence as well as French and Italian consumer confidence – are likely to have improved in June. The German GfK consumer confidence for July could have remained unchanged.

French consumer spending probably went up slightly in May, as consumer confidence improved. EMU industrial new orders might have remained more or less unchanged in April, just like the corresponding German figure. Following its usual seasonal pattern, the EMU current account is likely to have deteriorated in April. French Q1 GDP might be revised downwards.

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Published on  Mon, Jun 22 2009, 08:10 GMT