German business climate slips in November due to partial lockdown

Macro
Christopher Dembik

Summary:  German business climate weakened for the second consecutive month in November due to the implementation of a partial lockdown to cope with the second wave of the virus. Business climate was sharply down in the accommodation and the travel industries which are among the economic sectors most affected by the ongoing crisis.


Q4 GDP is likely to be slightly negative

  • The Ifo business climate index for November is pretty much similar to what we have already seen with the PMI figures released yesterday. The index of business climate is back to 90.7 versus 92.5 in October and the index of current conditions is slightly down at 90.0 vs 90.4 the previous month. Business climate in the services sector is falling sharply as further restrictions have been enacted in recent weeks to deal with the second wave of the virus. The drop in sentiment is particularly important in the accommodation and the travel industries. In contrast, the industry sector has resisted well the downtrend in the economy, but the slight deterioration in export expectations points to further economic weakness ahead.

  • The drawdown in business climate constitutes another signal that Germany’s Q4 GDP is likely to be out negative before bouncing back in Q1 2021.

The partial lockdown outweighs the good vaccine news

  • Looking ahead, those questioned are not showing much optimism for the next six months. The forward-looking German Ifo expectations index dropped to 91.5 vs exp. 93;5 and prev. 95 in November. Rising COVID cases and the likelihood of a prolonged period of restrictions to avoid a third wave continue to weight on business sentiment. Despite recent encouraging vaccine news from Pfizer, Moderna and AstraZeneca, sentiment is likely to remain subdued until a vaccine is widely distributed, which means until at least January/February next year.

  • The next release of the Ifo business climate index for Germany is scheduled on 18 December.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide and Product Disclosure Statement to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as CFDs and Margin FX products may result in your losses surpassing your initial deposits. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.
Please click here to view our full disclaimer.