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Economy in Brief

A Mixed Bag of Data from Germany: The ZEW Index of Expectation Down Sharply, Employment and Prices Higher
by Louise Curley November 9, 2004

Optimists among German institutional investors and analysts were hard to find in November. The ZEW index that shows the balance of those expecting improved conditions during the next six months over those expecting worse conditions fell to 13.9% from 31.3% in October. This was the lowest value since January, 2003. The rise in the euro and the price of oil were cited as the principal causes of worry about the outlook.

The quarterly survey of employment conducted by the Federal Statistical Office, reported the third quarter-to-quarter increase in seasonally adjusted employment in the third quarter. These increases in employment are the first since late 2001. In its press release, the FSO noted that the increased use of temporary workers and the subsidization of single person or family companies -- labor reforms, known as Hartz I and II that became effective in 2003--played a positive role in the rise in employment.

The harmonized index of consumer prices was 107.0 in October, up 0.38% from September and 2.00% above October 2003. The details are not yet available for October, but the high and rising price of oil during the month was likely a major cause of the rise in the overall index.

The year-to-year changes in employment and prices are shown in the attached chart.

  Nov 04 Oct 04 Nov 03 M/M Dif Y/Y Dif  2003    2002    2001   
ZEW (Percent balance) 13.9 31.3 67.2 -17.2 -53.3 36.4 45.3 2.8
  Oct 04 Sep 04 Oct 03 M/M %  Y/Y %   2003    2002    2001   
Harmonized CPI (2000=100) 107.0 106.6 104.9 0.38 2.00 104.5 103.4 103.0
  Q3 04 Q2 O4 Q3 04 Q/Q Dif Y/Y Dif  2003    2002    2001   
Employment  (Thousands) 38390 38371 38294 15 96 38316 38699 38923
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