sentix Economic News

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

Background information on the sentix economic indicators

Expectations downtrend stopped

Since August there was a strong downtrend of the economic expectations for all of the important economies. This trend is stopped now. The latest announcements by the Bank of Japan and the European Central Bank (ECB) let investors' 6-month-expectations rise again visibly. This is rather remarkable as it recently looked as if the ECB would have lost its power to turn economic expectations round. But also for the US – where the central bank is on a different path – the composite index improves significantly. All in all, fears of a free fall of the world econ-omy are banned for the moment. Nevertheless, it remains unclear if the current month's rise in economic expectations is just a one-off or a more important turn to the positive. The sentix data justify cautious optimism, but not more than that.

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Euro zone shrinking, the world feeble

In October, the composite index for the euro zone falls for the third time in a row. As both the assessment of the current situation and the 6-month expectations are now clearly in negative territory, the sentix indices signal shrinking output for the euro area. And there are no positive news coming from the indicators for the other coun-tries or regions either: all composite indices recede this month! Even for the US and Asia ex Japan – both stood out until recently with rather solid indices – the economic shine fades. It is mainly investors' 6-month expecta-tions that worsen. All in all, the data points to a nearing downturn of the world economy.

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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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