MIL OSI Translation. Region: Germany / Deutschland –
Source: Federal Ministry for Economic Affairs and Energy The German economy was able to continue its catching-up process. However, economic momentum is likely to be dampened more in the fourth quarter of the year by the partial lockdown that has existed since early November and the recently resolved hard lockdown. Industrial production increased further in October. A strong growth impulse came from the weighty motor vehicle sector. The incoming orders speak for a continuation of the recovery process in the industry, but the pandemic could weigh on the development. Sales in the retail trade excluding motor vehicles have recently shown a slight upward trend. The number of monthly new car registrations by private owners almost reached the mark of 120,000 in November and was thus noticeably above their average monthly values in 2018 and 2019. However, current leading indicators suggest a deterioration in the consumer climate. The new partial lockdown is still affecting the labor market Not. The positive trend in unemployment, short-time working and gainful employment continued in November and October. The significantly increased number of advertisements for short-time work in November indicate an increase in people on short-time work. General situation: recovery marked by uncertainty The economic catch-up process has recently continued, but the course of the pandemic poses a risk. After a historic decline in gross domestic product in second quarter of 9.8 percent, the German economy recovered noticeably in the third quarter and grew by 8.5 percent. It reached around 96 percent of its level from the final quarter of 2019 before the outbreak of the pandemic. In October, further increases in economic output were predominantly observed. Production in industry received a strong growth impetus from the automotive industry, which once again posted strong growth. Most other industries also grew. Incoming orders in the manufacturing sector even exceeded their level from the fourth quarter of 2019 by around 3 percent. Other economic indicators also paint a positive picture: exports rose for the sixth time in a row in October. In addition, the retail sector was able to increase its sales again in October. Employment and employment subject to social security contributions continued to increase. Unemployment fell noticeably in November, but the outlook for the future is weighed. The Ifo Business Climate deteriorated in November and is now slightly negative on balance. The main reason for this was business expectations, which, like export expectations, have clearly deteriorated. The partial lockdown, which has existed since the beginning of November, and the other measures adopted to reduce social contacts are particularly affecting the hospitality industry and companies in the leisure and tourism sectors. With the recently resolved hard lockdown, other areas are now also affected. In the cautious export expectations, the strength of the second Covid wave is particularly reflected in a number of European countries. All in all, economic growth in Germany is likely to suffer a noticeable setback in the fourth quarter. Global economic development remains in the shadow of the pandemic The global economy is still recovering, but sentiment indicators are more subdued. Global industrial production expanded 0.9 percent in September, the fifth month in a row. It has again reached over 98 percent of its previous year’s level. With a further expansion in September of 2.1 percent, world trade also approached the previous year’s level (also over 98 percent). However, the sentiment indicators are currently pointing to a slowdown in the global economic catch-up process. The composite purchasing managers’ index of J. P. Morgan / IHS Markit fell slightly in November and at 53.1 points was still above the growth threshold of 50 points. The sub-index for industry paints a much more positive picture than that for services. The course of the pandemic and the lockdown measures imposed in many countries, which primarily affect service industries, are likely to have played a role in this. Slight further recovery in foreign trade Exports of goods and services also recovered in October, albeit at a slower pace. In October, their value increased by 1.5 percent, seasonally adjusted and nominally, compared to the previous month, for the sixth time in a row. In a two-month comparison between September / October and July / August, there was a noticeable increase of 3.7 percent. Imports of goods and services in October increased only slightly by 0.7 percent compared to the previous month. In a two-month comparison, there was an increase of 2.4 percent. The strengthened pandemic and the lockdown measures of important trading partners are only partially reflected in the national leading indicators for foreign trade, which paint a mixed picture. The Ifo export expectations of the manufacturing sector for the next three months, which had already declined in October, turned negative in November on balance. The decisive factor here is the powerful second wave of pandemics in many European countries. Incoming orders from abroad continued in October (+3.2 percent), however, the upward trend that began in May. The prospects for German foreign trade are being dampened by the measures taken to combat the pandemic. However, this is likely to affect the services more and less the manufacturing sector.Industrial activity receives strong impetus from the automotive sector Production in the manufacturing sector continued its recovery in October. It increased by 3.2 percent compared to the previous month. After a data revision, a higher plus of 2.3 percent was reported for September. In October, both industry and construction saw growth (+3.3 percent and +1.6 percent, respectively). Within the industry, a strong contribution to growth came from the motor vehicle sector, which posted an increase of 9.9 percent. Most other industrial sectors also reported growth. In a two-month comparison between September / October and July / August, production in the manufacturing sector increased by 4.1 percent. In industry and in construction there was an increase of 4.0 percent and in the energy sector of 5.9 percent. In October, incoming orders in manufacturing continued their continuous recovery since May 2020 and rose again in October by 2, 9 percent to. In a two-month comparison there was an increase of 5.0 percent. Incoming orders from Germany and the non-euro area increased more strongly than those from the euro area. Overall, orders last exceeded their level from the fourth quarter of 2019 before the pandemic crisis by around 3 percent in October. In the automotive sector it was as much as 8 percent and in mechanical engineering almost 5 percent. The manufacturing industry is gradually working its way out of the crisis. In industry, production was most recently at almost 96 percent of its level in the fourth quarter of 2019. Even if the incoming orders point to a continuation of the recovery process, the further course of the industrial economy remains characterized by uncertainty in view of the pandemic and the lockdown. Retail trade slightly upwards Sales in retail have been well above their pre-crisis levels since May. In October, retail sales excluding motor vehicles increased by 2.6 percent, following a 1.9 percent decrease in the previous month. The trade in motor vehicles increased by 1.9 percent in September, after a decline of 3.9 percent in August and a very strong increase of 23.0 percent in July. It again noticeably exceeded its level from February before the corona pandemic. New registrations of cars by private owners rose by 14 percent in November (October +2.3 percent). The number of new registrations by private owners was most recently almost 120,000 cars per month and thus significantly above the average monthly values in 2018 and 2019. The leading indicators reflect the infection rate of the past few weeks and the partial lockdown, but not yet decided on December 13th hard lockdown. The ifo business climate in retail fell noticeably in November, and overall negative assessments now predominate. The GfK consumer climate is expected to deteriorate further in December, with consumer prices falling noticeably by 0.8 percent in November compared to the previous month. In the previous months, the temporary reduction in taxes on sales, a considerable part of which was passed on to consumers, had a noticeable dampening effect on prices. However, the main reason for the current drop in prices was the package tours, which were significantly cheaper than in the previous month, but there is far less demand for them than is usual at this time of the year. The inflation rate, the price development compared to the previous year, was -0.3 percent in November (October: 0.2 percent). Such a low inflation rate was last reported in January 2015. The prices for energy products and package tours fell by 7.7 percent and 4.4 percent, respectively. The rate of inflation remained the same for food (+1.4 percent) and housing (+1.3 percent). In services it rose slightly to 1.1 percent. The core inflation rate (excluding energy and food) was unchanged at +0.5 percent in November. The impact on the labor market is less pronounced – but short-time working is likely to be increasingly used again. Employment has increased slightly since the summer and unemployment and underemployment decreased as short-time work flattened out. After the partial lockdown, however, there is a renewed increase in short-time work. In October seasonally adjusted employment increased by 20,000 for the fourth month in a row. The demand for labor remains restrained, however, also due to the low fluctuation. Employment subject to social security contributions rose sharply in September to 31,000 people, seasonally adjusted. Short-time working was used by 2.2 million employees in September, around 330,000 fewer than in August. However, the reports for short-time working (for 537,000 people) received in the period from November 1 to 25 indicate a noticeable increase. Registered unemployment fell in November by a seasonally adjusted 39,000 people. According to the original figures, unemployment fell to 2.70 million people. The year-earlier difference has decreased by almost 120,000 to +519,000 people since the summer. The survey-based leading indicators from IAB, Ifo and the BA increased somewhat at the beginning of the partial lockdown.
EDITOR’S NOTE: This article is a translation. Apologies should the grammar and / or sentence structure not be perfect.