Recruiting in Germany Bulletin June 2017

Economic Commentary - what they are saying

GERMAN ECONOMIC INDICATORS IN JUNE 2017

German business confidence rose to 114.6 points in May, up from a revised 113.0 in April (previously reported: 112.9), marking an all-time high and overshooting market expectations. 

According to the IFO institute, the increase reflected the fact that businesses became much more optimistic regarding both current business conditions and business conditions over the next six months. Firms in the manufacturing, construction and wholesale sectors grew, while those in the retail sector edged slightly compared to April. Fixed investment growth came in at a multi-year high, thanks in large part to the ongoing construction boom.

The Markit Flash Composite Purchasing Managers’ Index (PMI) rose to 57.3 in May, up from 56.7 in April, marking the highest reading in over six years.
 
GDP growth should remain robust this year, thanks to a strong external sector and resilient fixed investment. However, higher inflation will weigh on household consumption, although oil prices are relatively stable at present. GDP growth accelerated and is well balanced, with all main categories accelerating.

 
German inflation slowed down to 1.5% again in May, after 2% in April and 1.6% in March 2017. The decrease is mainly attributed to lower energy prices as stated above.
 
Quite significantly, the German unemployment-rate hit another low in May with 5.6%, the number of unemployed fell by another 77,000 to 24498m (MoM) and by 166,000 (YoY). This is a new record and these low levels have not been seen since the German re-unification.
 
All in all, the German economy seems to have got off to a strong start for the year and the current picture is one of sheer strength against its European neighbours.
 
GERMAN EXPORTS

In May, German exports reached a new record high, with exports reaching more than Euro 118bn thereby rising by 0.4% MoM and even by 10.8% on a YoY-basis 

ELECTION IN GERMANY in 2017

The Federal election in Germany will take place on Sunday, September 24. 
 
The party of Chancellor Angela Merkel scored an upset victory in elections in Germany's most populous state NRW in May that were seen as a dress rehearsal for national parliamentary elections in September when she will seek a fourth term.

The victory in North Rhine-Westphalia, home to 18 million people and one in five German voters, dealt a severe blow to Martin Schulz, Mrs Merkel’s Social Democratic challenger.

The latest ‘Deutschland Trend’ poll by ARD shows that the Christian Democrats are still well ahead with 39per cent support which has increased. 

The Social Democrats (SPD)are as low as 24 percent in the polls, up from just 20 percent in January 2017 when Mr Schulz revealed he was standing. The party appears to be in disarray after losing three state elections since January.

The SPD has been falling further behind Chancellor’s Angela Merkel’s Christian Democratic Union in recent opinion polls, whilst the FDP (Liberals) are doing very well at the expense of the SPD.

Chancellor Merkel is as popular as ever and is looking good for a fourth term in office.