Danske Research Team
Danske Bank A/S
German IFO expectations have increased for the first time since April and were at 99.7 in November up from 98.3 in October. The improvement was in line with the financial ZEW expectations, which is usually a good leading indicator for IFO expectations.
The increase in IFO expectations was broad-based with higher expectations in the retail, wholesale, construction and manufacturing sectors.
The current assessment component, which has also trended lower since April, increased to 110.0 in November from 108.4 in October.
The increase in the German IFO expectations could be a first sign that the German PMI manufacturing will also start to increase in coming months. This is supported by a rebound in the order-inventory balance in the flash estimate for manufacturing PMI in November after a large drop in October.
The improvements within manufacturing will support economic activity going forward. Private consumption, which has been less negatively affected recently, is still contributing to GDP growth and, according to the German Statistisches Bundesamt, households increased their final consumption expenditure considerably in Q3 14.
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