GERMAN DATA
The details behind the September's IFO survey suggest that the decline in the manufacturing sector is set to continue. Sentiment deterioration was quite broad-based, as demonstrated by the below chart of 3-month averages.
- Manufacturing: current assessment -21.5 vs -17.8, expectations -21.7 vs -17.9. The overall climate (-21.6 vs -17.8) is now significantly worse than when it bottomed out during late 2023/early 2024 ("cycle" low at -17.2 Dec-23). This aligns with IWK's Demary pointing to structural under-investment as a main driver behind the decline in a recent interview with MNI (MNI INTERVIEW: VW Crisis Should Be Wake-Up Call - IWK's Demary', MNI, September 18).
- Services: the only main sector with the current assessment in expansionary territory (+6.5 vs +12.3), although expectations remained negative (-13.0 vs -14.0) to tilt the overall climate balance back into negative territory.
- Trade: current assessment -25.3 vs -24.4, expectations -34.2 vs -30.3. On a 3mma measure, the sector now prints close to its initial pandemic fallout, with the climate index of -28.4 vs lows of -33.1 at the depths of the pandemic.
- Construction: stabilized recently but at a very low level with current assessment -18.9 vs -18.3, expectations -31.2 vs -34.8.
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