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Economy in Brief

IFO Detail Shows Strong Readings but Slipping Momentum 
by Robert Brusca June 28, 2007

Germany's consumer goods sector is losing momentum: current situation is still improving but expectations and orders have soured.

Same picture for capital goods: current situation is still improving; expectations have gone flat while orders are getting volatile.

The IFO percentile readings show that orders on hand have slipped to the 85th percentile. Month-to-month demand has slipped to the low 70th percentile. Business expectations have fallen out of their 80th percentile. These readings are still elevated but are less than other components. The current situation is still improving. Foreign orders on hand also are still growing. But business expectations, activity (m/m) and orders on hand are shrinking.

The IFO three month outlook shows that orders expectations are faltering in wholesaling and falling in retail. Business export expectations are also fading. Only employment expectations are still improving and at a quickening pace. But employment is a notoriously lagging variable.

IFO Survey: Germany
  Percent: Yr/Yr Index Numbers
  Jun-07 May-07 Apr-07 Mar-07 Feb-07 CURRENT Average Curr/Avg Percentile
Biz Climate 0.2% 2.8% 2.5% 2.1% 3.4% 107.0 95.6 111.9% 92.8%
Current Situation 1.7% 4.7% 6.3% 6.7% 9.3% 111.4 94.7 117.7% 87.9%
Biz Expectations -1.3% 1.0% -0.9% -2.3% -2.1% 102.8 96.6 106.4% 87.4%
                   
  Jun-07 May-07 Apr-07 Mar-07 Feb-07 CURRENT Average Curr/Avg Percentile
Biz Climate 0.2% 2.8% 2.5% 2.1% 3.4% 107.0 95.6 111.9% 92.8%
Current Situation 1.7% 4.7% 6.3% 6.7% 9.3% 111.4 94.7 117.7% 87.9%
  MFG 4.3% 6.6% 7.6% 9.4% 12.1% 112.0 92.1 121.6% 97.0%
Biz Expectations Jun-07 May-07 Apr-07 Mar-07 Feb-07 CURRENT Average Curr/Avg Percentile
  MFG -2.8% 1.0% -1.4% -3.0% -4.1% 100.6 96.4 104.4% 78.1%
Activity (m/m) Jun-07 May-07 Apr-07 Mar-07 Feb-07 CURRENT Average Curr/Avg Percentile
  MFG -3.7% 2.0% -0.5% 0.4% 4.4% 103.8 96.8 107.2% 81.6%
Demand (m/m) Jun-07 May-07 Apr-07 Mar-07 Feb-07 CURRENT Average Curr/Avg Percentile
  MFG -7.1% 0.5% -3.6% -1.6% 1.6% 102.6 97.0 105.8% 73.3%
Orders on hand Jun-07 May-07 Apr-07 Mar-07 Feb-07 CURRENT Average Curr/Avg Percentile
  MFG -3.6% -0.9% -3.0% -2.7% -0.6% 105.9 96.3 110.0% 85.8%
Foreign orders on hand Jun-07 May-07 Apr-07 Mar-07 Feb-07 CURRENT Average Curr/Avg Percentile
  MFG 2.0% 2.5% 1.9% 5.4% 7.6% 112.1 94.1 119.2% 98.1%
Yr/Yr percentage changes in underlying Indices
IFO outlook for 3-Months ahead
3-Mos ahead Percent Year over Year Index Numbers
Expected Activity Jun-07 May-07 Apr-07 Mar-07 Feb-07 CURRENT Average Curr/Avg Percentile
  MFG 3.4% 0.5% 0.7% -1.6% -2.2% 103.4 96.7 107.0% 96.0%
Orders Expectations
Retail Orders Expectations -1.1% -4.6% -10.9% -10.0% -11.4% -10.8 -17.4 62.2% 64.3%
Wholesale 0.6% 15.8% 15.0% 10.7% 10.9% 5.8 -14.1 -41.3% 80.4%
Export Biz Expectations
  MFG 0.4% -0.5% -1.1% -1.9% -1.3% 104.5 98.3 106.3% 94.7%
Employment Expectations
  MFG 8.4% 7.5% 6.4% 8.3% 7.3% 105.5 95.8 110.1% 81.0%
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