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Economy in Brief

DIHK Survey Points to Continued Improvement in German Economy
by Bob Brusca October 14, 2009

The DIHK survey, a poling of over 25000 firms by the German chambers of industry and commerce, is not conducted in Q3. So the fourth quarter’s -10 reading compares to the -17 reading from Q2. It is a net balance of opinion diffusion index. A strong improvement in existing conditions is indicated, but declines persist. DIHK itself pointed to the role in temporary government stimulus in boosting the survey and muted its optimism with expectations for more modest improvements in the index for the quarter ahead

The index has climbed up from the 14th percentile of its range in 2009-Q2 to stand in the 25th percentile in Q4. Business expectations are sharply higher at a raw reading of zero up from -27 in Q2. The range standing for that reading is up to a respectable 58th percent of the range from a low 13th percentile in Q2. Export expectations are up even more strongly to a raw reading of +7 from a Q2 reading of -37, pushing the percentile standing up to its 55th percentile from 1.3% in 2009 Q2. These sorts of progressions are in line with much of the data that have been reported that have showed foreign orders to be picking up, although some recent German export figures were more disappointing; that slowdown is not corroborated here.

As to investment, the Q2 percentile standing was the worst in the history of the survey, a history that extends back to Q4 1991. The improved standing to a still-weak 27th percentile on a raw reading of -17 nonetheless is sharply up from -30 in Q2. Still we can see that investment demands are lagging. Hiring intentions occupy a sort of middle ground at a raw reading of -15; conditions are much improved from Q2’s reading at -25. Still more cutting is indicated. The percentile standing has been boosted to its 38th percentile, but that is still weak. Clearly much more improvement will bee needed to stoke job growth and just to keep the prospect of more cuts at bay.

DIHK-Balance of Economic Opinion
  Net Balance Readings Change Range Q4'91 Percentile
  Q4-09 Q2-09 Q1-09 Yr Ago 2-Yr 3-Yr Q4-09 Q2-09
Economic Conditions -10 -17 2 -27 -41 -34 25.8 14.5
Business Expectations 0 -27 -35 7 -15 -10 58.3 13.3
Export Expectations 7 -34 -35 -6 -30 -27 55.3 1.3
Investment Intentions -17 -30 -23 -15 -31 -23 27.7 0.0
Hiring Intentions -15 -25 -20 -13 -24 -15 38.3 17.0
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