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Economy in Brief

German IFO Detail Slows Some Slippage Amid Strength
by Robert Brusca August 31, 2007

In the German IFO framework the biggest slippage seems to be in orders on hand, month-to-month demand, and business expectations. These measures have dropped into the 60th to 70th percentile ranges of their respective histories. These are still firm readings but not so strong. One continuing feature of interest in this report is the strength of foreign orders on hand. Foreign orders are still near their peak reading in the 98th percentile of their range. Despite this the current situation is still evaluated as strengthening and is in the 95th percentile of its range.

The IFO’s three month outlook survey is also mixed. Only order expectations for retailers are weakening and they have been crumbling steadily and rapidly for months. Employment expectations are guarded.

The IFO’s diffusion measures by sector show a sharp drop for wholesalers with conditions eroding across most sectors. Construction and retail continue to post net negative signals and they too are fading.

IFO Survey: Germany
  Percent: Yr/Yr INDEX NUMBERS
  Aug-07 Jul-07 Jun-07 May-07 Apr-07 CURRENT Average Curr/Avg Percentile
Biz Climate 0.7% 0.8% 0.2% 2.8% 2.6% 105.8 95.7 110.6% 87.7%
Current Situation 2.5% 2.4% 1.7% 4.7% 6.3% 111.5 94.8 117.7% 88.2%
Biz Expectations: Next 6-Mos -1.2% -0.9% -1.2% 1.0% -1.0% 100.4 96.7 103.9% 76.5%
                   
  Aug-07 Jul-07 Jun-07 May-07 Apr-07 CURRENT Average Curr/Avg Percentile
Current Situation                  
MFG 4.4% 4.5% 4.4% 6.7% 7.6% 111.3 92.2 120.7% 95.3%
Biz Expectations: Next 6-Mos                  
MFG -1.9% -0.4% -2.8% 0.9% -1.4% 99.1 96.4 102.8% 73.1%
Activity (m/m)                  
MFG 1.0% -1.9% -3.7% 2.0% -0.5% 104.7 96.9 108.0% 85.4%
Demand M/M                  
MFG -2.8% -3.3% -7.0% 0.5% -3.7% 99.3 97.1 102.3% 62.2%
Orders on hand                  
MFG -2.4% -2.7% -3.6% -0.9% -3.0% 102.2 96.4 106.0% 72.7%
Foreign orders on hand                  
MFG 2.5% 1.9% 2.0% 2.5% 1.9% 112.1 94.3 118.8% 98.1%
Yr/Yr percentage changes in underlying Indices
IFO outlook for 3-Months ahead
3-Mos ahead Percent: Yr/Yr INDEX NUMBERS
Expected Activity Aug-07 Jul-07 Jun-07 May-07 Apr-07 CURRENT Average Curr/Avg Percentile
MFG 2.5% 1.0% 3.4% 0.5% 0.7% 102.5 96.7 106.0% 91.5%
Orders expectations                  
Retail Orders Expectations -1.1% -11.6% -10.9% -4.6% -10.9% -10.5 -17.5 59.9% 72.9%
Wholesale 0.8% 7.1% 5.7% 15.7% 15.0% 7.8 -14.0 -55.8% 84.5%
Export Biz Expectations                  
MFG 0.9% 0.0% 0.5% -0.5% -1.1% 102.8 98.4 104.5% 85.6%
Employment Expectations                  
MFG 4.1% 7.4% 8.4% 7.5% 6.4% 105.0 96.0 109.4% 57.1%
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