26 Jan 2016
Germany: Global uncertainty weighs on manufacturing – Deutsche Bank
FXStreet (Delhi) – Research Team at Deutsche Bank, suggests that a sharp decline in German manufacturing expectations weighed down the January ifo index with the rest of the report also being weak on balance.
Key Quotes
“This mostly confirms the weak PMIs reported on Friday and is in line with the disappointing external picture. Both indicators are still consistent with 0.4- 0.5% GDP growth in Q1, though (DBe: 0.5%). The market turbulences might have amplified the sharp decline of expectations.
What took us by surprise was that the little watched ifo services index also dropped sharply contrary to the more muted decline of the service PMI. While we would not take this at face value given this index’ weak forecasting performance, it is concerning as domestic services is currently Germany’s only real growth engine.”
Key Quotes
“This mostly confirms the weak PMIs reported on Friday and is in line with the disappointing external picture. Both indicators are still consistent with 0.4- 0.5% GDP growth in Q1, though (DBe: 0.5%). The market turbulences might have amplified the sharp decline of expectations.
What took us by surprise was that the little watched ifo services index also dropped sharply contrary to the more muted decline of the service PMI. While we would not take this at face value given this index’ weak forecasting performance, it is concerning as domestic services is currently Germany’s only real growth engine.”