IFO Detail Shows Spreading Weakness

IFO Detail Shows Spreading Weakness

July 29, 2008

By Robert Brusca

· The IFO is showing more weakness in Germany. Today’s report provides more detail from its earlier release. The current situation index is still strong residing in the 70th percentile since March of 1992. But expectations are down to the 29th percentile of their range for that period. Business expectations for the next six months are in their 33rd percentile for overall MFG. The consumer goods MFG sub-sector lags the most standing only in the 19th percentile of its range. The sectors construction, wholesaling and retailing stand in the 45th, 39th and 30th percentiles of their respective ranges. All are below their respective range midpoints. Only construction is still above its period average.

· The IFO finds that current activity is doing better for MFG activity at a reading in the 51st percentile of its historic range. Even so the MFG index is below its historic average. MFG demand is gauged as weak and is in the 37th percentile of its range. Orders on hand are in the 38th percentile of their range but foreign orders are much stronger, in the 81st percentile of their range. Domestic weakness in orders is being offset by strength from abroad despite the overly strong euro.

IFO Survey: Germany
	Percent: Yr/Yr					INDEX NUMBERS
	Jul-08	Jun-08	May-08	Apr-08	Mar-08	CURRENT	Average	Percentile
Biz Climate	-8.5%	-5.4%	-4.6%	-5.8%	-2.7%	97.5	96.0	52.7%
Current Situation	-5.1%	-2.7%	-2.1%	-4.2%	-0.7%	105.7	95.5	70.0%
Biz Expectations	-11.7%	-8.0%	-7.1%	-7.2%	-4.7%	90.0	96.7	29.7%
average & range since	Apr-92
	Jul-08	Jun-08	May-08	Apr-08	Mar-08	CURRENT	Average	Percentile
Biz Climate	-8.5%	-5.4%	-4.6%	-5.8%	-2.7%	97.5	96.0	52.7%
Current Situation	-5.1%	-2.7%	-2.1%	-4.2%	-0.7%	105.7	95.5	70.0%
MFG	-5.6%	-4.6%	-2.5%	-3.7%	-1.2%	105.2	93.2	80.0%
Intermediate goods	-7.0%	-6.6%	-6.9%	-6.9%	-3.7%	104.2	91.8	75.9%
Capital goods	-3.7%	-2.8%	2.1%	1.6%	1.6%	108.0	93.1	85.2%
Consumer goods	-6.4%	-4.1%	-1.4%	-4.1%	-0.5%	101.9	96.3	65.7%
Construction	-2.4%	0.6%	-1.1%	-2.7%	-4.0%	111.9	103.4	63.3%
Wholesale	-5.1%	-3.7%	-3.6%	-5.4%	0.0%	111.0	100.1	60.4%
Retail	-5.8%	4.8%	0.6%	-6.7%	3.7%	97.8	95.7	61.0%
*Next 6 Mos*
Biz Expectations	Jul-08	Jun-08	May-08	Apr-08	Mar-08	CURRENT	Average	Percentile
MFG	-13.7%	-9.5%	-8.3%	-8.3%	-5.6%	87.2	96.4	33.6%
Intermediate	-12.0%	-9.1%	-9.2%	-7.0%	-6.6%	87.2	95.8	28.2%
Capital	-17.7%	-9.0%	-8.4%	-8.7%	-5.1%	84.7	96.3	36.5%
Consumer	-11.0%	-11.1%	-6.4%	-9.6%	-6.0%	91.2	97.8	19.4%
Construction	-6.4%	-3.6%	-4.9%	-3.7%	-5.0%	98.5	98.4	45.2%
Wholesale	-9.8%	-7.4%	-9.2%	-8.9%	-6.1%	94.7	97.2	39.3%
Retail	-10.1%	-6.0%	-1.5%	-3.9%	1.5%	89.6	96.1	30.5%
(m/m)
Activity(m/m)	Jul-08	Jun-08	May-08	Apr-08	Mar-08	CURRENT	Average	Percentile
MFG	-6.2%	-5.3%	0.5%	-6.1%	-1.9%	96.6	97.1	51.7%
Intermediate	-5.0%	-4.8%	-1.9%	-6.6%	-3.8%	96.0	96.4	51.8%
Capital	-5.7%	-7.0%	2.9%	-4.2%	0.4%	98.4	97.3	61.4%
Consumer	-5.9%	-4.5%	0.0%	-9.0%	-1.4%	97.5	98.5	42.5%

Demand M/M	Jul-08	Jun-08	May-08	Apr-08	Mar-08	CURRENT	Average	Percentile
MFG	-9.1%	-9.9%	-2.4%	-11.3%	-4.1%	92.1	97.1	37.1%
Intermediate	-6.2%	-7.7%	0.5%	-10.6%	-4.7%	94.7	97.5	42.4%
Capital	-13.7%	-13.3%	-3.3%	-13.8%	-5.0%	86.6	95.9	36.8%
Consumer	-9.9%	-10.8%	-3.2%	-7.6%	0.5%	94.2	96.6	37.5%

Orders on hand	Jul-08	Jun-08	May-08	Apr-08	Mar-08	CURRENT	Average	Percentile
MFG	-11.0%	-9.8%	-4.7%	-8.8%	-1.0%	92.7	96.5	38.8%
Intermediate	-8.3%	-7.6%	-1.5%	-9.8%	-3.4%	94.5	96.6	42.9%
Capital	-16.7%	-14.7%	-9.1%	-10.1%	0.5%	88.1	95.8	37.7%
Consumer	-5.4%	-5.4%	-1.5%	-7.2%	0.5%	98.4	98.6	41.3%
Foreign orders on hand	Jul-08	Jun-08	May-08	Apr-08	Mar-08	CURRENT	Average	Percentile
MFG	-5.3%	-4.8%	-2.9%	-2.0%	-1.0%	105.7	95.3	81.0%
Intermediate	-5.4%	-5.9%	-3.9%	-3.9%	-2.9%	103.3	94.3	72.9%
Capital	-5.4%	-5.9%	-3.2%	0.9%	1.4%	107.9	94.4	83.9%
Consumer	-3.6%	-1.5%	0.0%	-4.5%	-3.6%	107.2	99.0	74.1%
Yr/Yr percentage changes in underlying Indices
IFO outlook for 3-Months ahead
3-Mos ahead
Expected Activity	Jul-08	Jun-08	May-08	Apr-08	Mar-08	CURRENT	Average	Percentile
MFG	-8.0%	-6.5%	-2.8%	-3.2%	-1.9%	94.9	96.9	54.2%
Intermediate goods	-7.0%	-8.4%	-3.2%	-4.9%	-2.8%	95.5	96.4	52.8%
Capital goods	-9.4%	-7.0%	-2.2%	-0.9%	-2.8%	93.5	96.7	52.7%
Consumer goods	-7.0%	-4.2%	-3.8%	-3.7%	-1.3%	96.6	98.3	38.0%
Orders expectations	*Changes over 12-months*
Retail Orders Expectations	-13.0%	1.0%	-4.0%	2.1%	6.0%	-24.1	-17.3	44.7%
Wholesale	-17.0%	-6.0%	-11.0%	-16.9%	-6.0%	-9.6	-13.2	50.9%
EXPORT Biz Expectations
MFG	-4.3%	-4.7%	-3.8%	-1.8%	-1.5%	99.2	98.6	67.0%
Intermediate goods	-5.8%	-6.7%	-5.2%	-2.3%	-1.9%	98.5	99.0	55.9%
Capital goods	-3.3%	-2.9%	-3.7%	1.0%	-1.9%	99.2	97.8	73.9%
Consumer goods	-3.8%	-2.4%	-1.0%	-5.2%	-2.4%	100.1	99.2	55.6%
Employment Expectations
MFG	-6.2%	-4.7%	-1.5%	-0.5%	-1.6%	99.9	96.4	61.6%
Intermediate goods	-3.7%	-4.2%	-1.6%	0.0%	-0.6%	101.4	96.4	73.8%
Capital goods	-9.6%	-6.6%	-1.0%	-0.5%	-2.5%	97.6	95.5	52.7%
Consumer goods	-3.0%	-3.1%	1.0%	-1.5%	-3.1%	101.3	95.1	79.6%

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