Global| Jun 28 2007IFO Detail Shows Strong Readings but Slipping Momentum
Summary
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 [...]
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.
| 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% |
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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