sentix Economic News

Read the latest information and indications about the "first mover" among the economic indicators!

Background information on the sentix economic indicators

Euro-zone index collapses again – despite Draghi

Despite the new measures taken by the European Central Bank (ECB) last Thursday the composite index for the euro zone collapses. It falls from +2.7 to now only -9.8 points. As both, the assessment of the current situation and investors' 6-month expectations, now have reached negative territory, the indicator signals a new recession for the euro area! This is all the more noteworthy as during Mario Draghi's presidency the ECB has managed on several occasions to turn round investors' economic expectations. Now, this does not seem to work anymore. In this context it is interesting to know that 6-month expectations of the global aggregate have fallen to their lowest level since November 2012, the time when Japan started its "Abenomics" and managed to influence investors' expectations positively. But obviously central banks have currently – against the backdrop of a number of geopolitical conflicts – lost their power to steer investors' economic expectations.

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The Russia Effect – Germany sends a cyclical downturn alarm

The sentix Economic indices leave their mark with a strong drop in August! The total index for Euroland is reduced by 10.1 to now only 2.7 points. The economic expectations put especially strong pressure on the total index. A sur-prising drop by 13.3 points is founded on the EU's economic sanctions against Russia. The German index feels this effect in particular: the total index there drops even more strongly from 29.0 points to now only 17.9 points. Here, expectations lose 13.1 points and are now negative for the first time since November 2012 at -1.3 points. The USA and Asia ex Japan are fighting against the trend – however, their expectational components drop, also. All these slumps are founded in the Ukraine-crisis which is now radiating out more and more strongly. The index for Eastern Europe drops to -12 points and, with that, into recession mode.

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Global economic momentum helps the euro zone

After having receded for two months in a row, the sentix economic index (composite index) for the euro zone increases again in July by 1.6 to now 10.1 points. On the one hand, investors assess the current economic situation as being better than last month. On the other hand, 6-month expectations also increase slightly after having weakened for four consecutive months. This stabilisation of expectations coincides with a European Central Bank taking new expansionary monetary measures. But a probably more important impact for the euro zone comes from the world economy as expectations improve even more strongly for the other regions in the survey. Posi-tive developments are especially pronounced for the US and for Japan. This should also have had a positive influence on investors' judgments concerning the euro area, too. Consequently, the euro zone now seems to bene-fit from a stronger world economy, while it was itself a prominent motor of global growth until just a few months ago.

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Euro-zone expectations drop despite Draghi

For the euro zone the sentix Economic Index (composite index) drops markedly in June. This is its second decrease in a row. Investors judge the current situation much worse than in the previous month, and their 6-monthexpectations also decline. The clear setback of the euro-zone index surprises as, in June, investors assess the economic conditions for the remaining world regions as better than before. It is mainly the emerging markets for which their sentiment brightens. The euro-zone indicators' decrease all the more comes as a surprise as the European Central Bank has just announced a whole package of new measures to push economic growth and inflation. But investors so far do not see this aspect of the ECB's policy while they do expect strong effects on the bond market, as complementary sentix data show. 

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Expectations fall across the board

Last month we pointed to the fact that the German economy had lost steam and had probably seen its best times in the current upswing already. Now, it looks as if the economy of the euro zone will suffer the same fate: While assessments of the current situation continue their way up, investors' 6-month expectations are down markedly in May. They fall for the third time in a row. This usually hints at a trend reversal. For Germany, the observations are quite similar: Here, too, the composite index retreats because expectations fall. At the same time the current situation is seen in a better shape than last month. The difference to the euro zone is that for Germany the composite index worsens since February already. For the other countries and regions, the composite indices are also weaker than in April. The developments are especially pronounced for Japan and Eastern Europe.

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