QUICK QUILL — Like the United States, industrial activity in Germany remains moribund with signs of oversupply in chemicals, which sit at the beginning of the supply chain. Record fiscal stimulus this year has also failed to lift GDP, the jobs market, consumer sentiment and income expectations. We remain constructive on the euro and respectfully beg to differ on the ECB’s holding pattern stance despite inflation slightly north of policymakers’ 2% target.
TAKEAWAYS
- On a real basis, German GDP has lagged the U.S. for most of the post-COVID era, and printed at a flat 0% QoQ annualized in Q3; despite record stimulus measures passed earlier this year, German GDP has continued to lag behind the rest of the Euro Area this year
- The IFO German Chemicals Inventory Assessment gauge has spiked 10.2 points to 31.3 thus far in Q4, the third highest print on record; the result flags upstream oversupply given Chemicals New Orders and Production Expectations both remain in negative territory
- German Higher Unemployment Expectations fell 1.5 points to 57.2% in November, but have been above their long-run average for 17 months running; meanwhile, German GfK Income Expectations fell from 2.3 to -0.1, their first negative print since March