German economy is stabilizing – but a mild recession is likely

German economy is stabilizing – but a mild recession is likely


metal industry

The price pressure in Germany has surprisingly weakened.

(Photo: imago images/Rupert Oberhäuser)

Berlin The downward slide in the German economy surprisingly weakened in November due to the easing of price pressure. The purchasing managers’ index for the private sector – industry and the service sector together – rose by 1.3 to 46.4 points. The financial service provider shared this S&P Global on Wednesday for its monthly survey of around 800 companies.

Economists surveyed by the Reuters news agency, on the other hand, had expected a drop to 44.9 points. Nevertheless, the barometer, which has received much attention on the financial markets, remained below the 50 mark for the fifth month in a row, from which point it signals growth.

“The November data does not change the assessment that Germany probably headed for a recession,” commented S&P economist Phil Smith on the development. “However, there is reason to hope that the decline in economic output could be weaker than initially feared.”

Industrial production declined less sharply, while material availability improved and delivery times shortened again for the first time in almost two and a half years. The price pressure has also eased. The increase in purchase prices in industry weakened significantly.

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Business prospects have also stabilized. “The mild autumn might have it Worry about a gas shortage in winter scattered,” Smith said. However, expectations are still deeply negative. “The reason for this is the great concern about the soaring cost of living and rising interest rates, as well as the still high level of uncertainty,” said the economist.

Definition: What is a recession?

Ifo President Clemens Fuest recently expressed cautious optimism about the prospects for the German economy. If a gas shortage in winter can be prevented, there is a chance of a mild recession. “We also see that the industry is surprisingly well – at least in the short term – coping with the energy shortage and the high energy costs,” said the economist of the Reuters news agency. “So far we haven’t seen any slump in industrial production.”

>> Read here: Backlog of orders, euro exchange rate, government housing: these are the rays of hope for them Economy

Exceptions were the energy-intensive companies, such as the glass and ceramics industry. “All in all, the economy is proving to be more robust than many had expected,” said Fuest.

More: EU Commission expects recession in entire euro zone



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