Germany – Early Bird Remains Positive

After four months of essentially stable readings, the Early Bird – our leading indicator for the German economy – fell by 8 points to 25 points in August. This significant decline was driven in part by a slightly stronger euro, which reduces the price competitiveness of German products on the global market. In addition, the tailwind from monetary policy has continued to diminish. Although the short-term real interest rate is still negative – and thus very low by long-term standards –, which favors investment, the real interest rate is now higher than it was a year ago, which tends to slow economic activity.

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