The last post highlighted the failing fortunes of the European consumer as Retail PMI’s fell across the continent, with some sliding into contraction territory.
Now it is the turn of German business confidence, as reflected in the monthly ZEW (Zentrum fur Europaische Wirtschaftsforschung – Centre for European Economic Research) survey:
Source: Investing.com Click/Tap to Enlarge
As you can see rarely does German business get too pessimistic apart from at times of real crisis as the long term chart shows:
Source: ZEW Click/Tap to Enlarge
Another interesting insight form this longer term chart is how despite the much balyhooed hoo-haw over the largely fictional “global synchronised recovery” (covered HERE) German businesses have hardly been popping champagne corks over the last couple of years with the outlook being firmly below average
Indeed despite being of a rather cynical disposition this surprised me as I felt there was a real buzz on my trip through Germany last year (if combined with a rather parochial outlook), an observation that was shared with some more seasoned European equity managers I talked to subsequently.
Perhaps more interestingly is that, as always, German statistics leak through to the wider Eurozone, as we can see from the Eurozone ZEW survey results, where regional confidence has flattened, if not yet turned negative:
Again nothing here that guarantees a recession anytime soon but it should inject perspective into those believing in a fairy tale recovery, or the misguided belief that after years of financially incontinent excess the failed policies of the authorities are finally gaining traction (the view of Britain’s best paid bond manager remarkably) as the growing evidence is that, past the short-term sugar rush, this is no more sustainable than the other post-GFC blips……….
Oddly basically what the OECD predicted when describing the “Synchronised short-term global upturn” last Autumn before the notion was hijacked by all and sundry mesmerized by the “synchronised” word, the latest talisman of the “hard-of-original-ideas” crowd.
More troublingly if this does indicate an economic fade and Central Bank stimulus continues to be withdrawn we could well soon see how the sugar rush has merely postponed the inevitable for a short-time, while concurrently permitting and hiding an even more unsustainable debt build up…which we will cover again shortly.