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Economy in Brief

IFO Shows Sector Indices Have Bottomed...Maybe
by Robert Brusca May 26, 2009

IFO improves, barely -- The IFO survey is in the same boat as the rest of the recent economic indicators. The index is off its low, and rising but still showing contraction. The improvement in May continued but was very slight for most sectors. Manufacturing was unchanged at a reading of -38 on the month. Construction actually got worse in the month. Despite the worsening of construction it remains in the 46th percentile of range since 1991-about a middling reading. Construction has been pressured for some time. MFG is in the bottom seven percentile of its range. Wholesaling and retailing are in the bottom 17th to 22nd percentile of their respective ranges.

Outlook uncertain -- Germany is still quite weak. There is a legacy of bottoming and rebounding but on the other hand the rebound trends is a mild gradient and the sense of upward momentum is slight. The future is still in doubt.

Summary of IFO Sector Diffusion readings: CLIMATE
CLIMATE Sum Current Last Mo Since Jan 1991*
  May-09 Apr-09 average Median Max Min range % range
All Sectors -32.1 -33.1 -9.0 -9.6 17.5 -36.2 53.7 7.6%
MFG -38.0 -38.0 -1.5 0.2 27.5 -42.9 70.4 7.0%
Construction -26.3 -24.3 -29.0 -30.3 0.7 -50.1 50.8 46.9%
Wholesale -28.3 -30.6 -14.4 -16.0 23.9 -39.0 62.9 17.0%
Retail -21.2 -26.5 -15.6 -15.0 19.2 -40.2 59.4 32.0%
Services -5.0 -7.0 11.0 9.5 28.5 -14.5 43.0 22.1%
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