Early Bird halts descent

The Early Bird got off to a good start in the new year, rising from 14 to 20 points in January. This has halted the downward trend that was observed over much of last year. The decisive factor here was the significant rise in the Purchasing Managers' Index for US manufacturing (ISM), which, together with its counterparts for the eurozone (excluding Germany) and China, represents the global economic environment in our indicator, which consequently improved significantly in January. The other two subcomponents of the Early Bird, however, deteriorated. The ECB's interest rate cuts are receding further and further into the past, which means that the stimulus they provided is likely to gradually diminish. In addition, the indicator of the German economy's price competitiveness – the real external value of a fictitious Deutschmark – was probably around 3% higher in January than a year ago, which in itself reduces the competitiveness of German products on the world market.

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