HeyEconomic growth in Germany and the eurozone is declining surprisingly sharply. The private equity market index – industry and service providers together – fell 2.4 percent in June to 51.3 points and thus to a six-month low, S&P Global said on Thursday in its monthly survey of about 800 companies in Germany. Economists only expected a drop to 53.1 points. The barometer, which is closely monitored in the financial markets, is therefore slightly above the 50-point threshold from which it signals growth. The data showed that “the German economy has lost almost all of the momentum it gained from easing restrictions on the coronavirus,” said S&P Global economist Phil Smith.
In the services sector, growth slowed sharply for the second time in a row. While the barometer for service providers alone fell unexpectedly significantly from 55.0 to 52.4 points, the industry index fell by 2.8 to 52.0 points and is therefore at its lowest level in almost two years. . “Declining orders abroad have proved to be a brake,” S&P explained. In addition, domestic demand is also under pressure as a result of increased economic uncertainty and persistently high inflation.
“The numbers are disappointing at all levels,” explained Helaba analyst Ralfcircul. The unfavorable framework conditions from the high prices, especially for raw materials and precursors, bottlenecks in delivery, staff shortages and rising interest rates blurred the prospects more clearly than before. Therefore, the rate hike expected by the European Central Bank (ECB) in July is out of the question, as monetary policy needs to reverse a record 8.1% inflation in the euro area. “But long-term interest rate expectations are likely to ease.”
At most a mini development
The index of market managers for the whole economy in the euro area fell unexpectedly sharply by 2.9 to 51.9 points, the lowest level in the last 16 months. “Economic growth in the eurozone is starting to run out,” said Chris Williamson, chief economist at S&P Global Market Intelligence. “Because the hitherto strong celestial wind from the outstanding demand associated with the pandemic is weakening more and more and is overcompensated by the shock of rising cost of living and falling business and consumer confidence.” The data signal the current growth “with a meager 0.2 percent”. after plus 0.6% in the first quarter. Companies were less optimistic about the future than they were last October 2020.
High inflation, continuing supply chain problems and now the increasingly real risk of a Russian gas outage are putting more and more strain on the economy, said LBBW expert Elmar Völker. “We are increasingly looking into an economic abyss – we have not yet fallen, but there are not many steps left on the cliff.”
In France, too, the economy slowed sharply and grew more slowly than ever after the opposite wind of the coronavirus triggered by the Omicron wave in January.