Germany - Early Bird gives us a glimmer of hope

Good news for the German economy: Our leading indicator for the German economy rose quite significantly in April, from 24 to 31 points. This was partly due to the easing of headwinds from the FX market. According to our estimates, the indicator of the German economy’s price competitiveness – the real external value of a notional D-Mark – was only about 1% higher in April than a year ago. In February, a real appreciation of more than 3% had still been recorded. In addition, the global economic environment – which we measure using the Purchasing Managers’ Indices for the U.S. (ISM Index), China, and the eurozone excluding Germany – improved somewhat despite the Iran war. The index for the eurozone excluding Germany rose noticeably. Unlike last month, this was primarily due not to a one-off effect, but to improved trends in production and new orders. The monetary environment, on the other hand, has deteriorated slightly amid growing speculation about an interest rate hike by the ECB

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