Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
Access both platforms from your single Saxo account.
German business climate slips in November due to partial lockdown
Christopher Dembik
Head of Macroeconomic Research
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.
Latest Market Insights
Quarterly Outlook 2024 Q3
Sandcastle economics
-
-
Bonds: What to do until inflation stabilises
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.
-
Equities: Are we blowing bubbles again
Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.
-
FX: Risk-on currencies to surge against havens
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.
-
Commodities: Energy and grains in focus as metals pause
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.
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/en-gb/legal/disclaimer/saxo-disclaimer)