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Market insight 22.02.2021

Stronger rebound than expected in German business confidence

Stronger rebound than expected in German business confidence

US: Chicago Fed index: 0.66 vs 0.52 expected (prior month revised from 0.52 to 0.41)

  • The index has improved from prior month, pointing towards progressive recovery in activity.
  • Separately, the Dallas Fed index has strongly rebounded from the prior month (index from 7 to 17.2) on improving current activity and global expectations.

 

Germany: IFO (Feb.): 92.4 vs 90.5 expected (prior: 90.3 revised from 90.1)

  • Business confidence has regained after the fall in Jan.; the index has turned more volatile in past months and is back to its Sept.-Oct. levels.
  • Both current sentiment and expectations have increased over the month; by sector, the sentiment in manufacturing has strongly rebounded, while it was just slightly less negative in retail and services from the prior month.

 

Switzerland: M3 (Jan.): 7% y/y (prior: 6.5%)

  • Monetary aggregates remained on a rising trend; M1 up by 9.7% y/y (9% y/y the prior month), M2 up by 6.6% y/y (6% y/y the prior month).

 

Turkey: Industrial confidence (Feb.): 108.7 (prior: 109)

  • Business sentiment has eroded from the prior month, but it remained close to absolute high level (s.a. data).
  • Sentiment weakened on production and global outlook, but it has increased on orders, exports, employment and capex.


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Market insight 26.02.2021

Strong rebound of US personal income (Jan.); falling French consumption (Jan.)

US: Wholesale inventories (Jan.): 1.3% m/m vs 0.4% expected (prior: 0.5% revised from 0.3%)

  • Inventories have increased for wholesalers but declined for retailers over the month.

 

US: Personal income (Jan.): 10% m/m vs 9.5% expected (prior: 0.6%)

  • Disposable income has strongly rebounded (11.4% m/m) due to renewed unemployment and direct supports to households.
  • Separately, wages were up by 0.7% m/m after 0.5% m/m the prior month.

 

US: Personal spending (Jan.): 2.4% m/m vs 2.5% expected (prior: -0.4% revised from -0.2%)

  • Spending has rebounded from the prior month, due mainly to purchases of durable goods (8.4% m/m) while spending on service was modest (0.6% m/m).
  • Saving ratio has strongly rebounded from 13.4% the prior month to 20.5%.

 

US: Core PCE (Jan.): 0.3% m/m vs 0.1% expected (prior: 0.3%)

  • Headline PCE inflation was up by 0.4% m/m due to higher energy prices.
  • Yearly trend in core PCE remained quite stable at 1.5% y/y vs 1.4% y/y the prior month (revised from previous 1.5% y/y).

 

US: Chicago PMI (Feb.): 59.5 vs 61 expected (prior: 63.8)

  • The index was back to its Nov. level, being highly volatile past quarters but remaining at high level; besides uncertainty on economy, bad weather conditions may have weighed down on sentiment with lower production and more delivery concerns.

 

US: Consumer confidence (Michigan) (Feb.): 76.8 vs 76.5 expected (prior: 79)

  • The index was finally better than expected and in first estimate, but it has decreased from the previous month.
  • Sentiment on current situation has slightly decreased, while expectations have decreased more meaningfully (but less than expected, from 74 to 70.7) back to its Nov. level.
  • In details, the picture was mixed: volatile opinions around future personal financial situation, still positive outlook on future economy, but some concern on unemployment and easing in willingness to buy large items from the previous month.

 

France: Consumer spending (Jan.): -4.6% m/m vs -4% expected (prior: 22.4% revised from 23%)

  • With renewed lockdown, sales have sharply decreased for manufactured goods.
  • While spending on autos, food and energy, the sales of other manufactured goods were down by 25% m/m.
  • Sales should remain depressed in Feb. but could improve in March-April on easier restrictions.

 

France: GDP (Q4-20): -1.4% q/q vs -1.3% expected (prior: 18.5%)

  • Slightly more negative revisions to past Q4 GDP.
  • Consumption was down by 5.4% q, while net exports, residential and capex were positive over the quarter.
  • Q1-21 GDP should remain negative, but probably no more than 1% q contraction.

 

France: CPI (Jan.): 0% m/m vs -0.3% expected (prior: 0.3%)

  • While energy prices have strongly rebounded, prices of food and goods have decreased over the month; services were up modestly by 0.1% m/m.
  • Yearly trend stayed quite stable at 0.7% y/y after 0.8% y/y.

 

Spain: CPI (Jan.): -0.6% m/m vs -0.2% expected (prior: -0.4%)

  • First estimates pointed toward still negative trend in prices.
  • Yearly trend turned back negative: -0.1% y/y after 0.4% y/y the prior month.

 

Switzerland: GDP (Q4-20): 0.3% q/q vs 0% expected (prior: 7.6% revised from 7.2%)

  • Activity was more resilient than expected in Q4; consumption was down by 1.5%q but public consumption and capex were positive; exports and imports were both under contraction over the quarter.
  • As lockdown continued, a flat growth or moderate contraction is expected in Q1, unless activity rebounds sharply on easier restrictions in March. GDP has contracted by 2.9% in 2020.

 

Switzerland: KOF (Feb.): 102.7 vs 96.6 expected (prior: 96.5)

  • After several months of declining business confidence, the index has rebounded close to levels seen past Summer.
  • As seen in Germany, confidence in industry is building up despite still existing headwinds.

 

Sweden: GDP (Q4-20): -0.2% q/q vs 0.5% expected (prior: 6.4% revised from 4.9%)

  • Public and private consumption were both in contraction and investment was modestly positive (0.1% q). Net export contribution was more positive thanks to sharp rebound in exports over the quarter.

 

Norway: Unemployment rate (Feb.): 4.3% as expected (prior: 4.4%)

  • After strong rebound the prior month, the unemployment ratio has eased somewhat over the month.
Market insight 25.02.2021

Firmer US durable good orders; improving business sentiment in the eurozone

US: Initial jobless claims (Feb.20): 730k vs 825k expected (prior: 841k revised from 861k)

  • Jobless claims have improved, but data could not be complete due to disruption in some states on bad weather conditions.
  • Continuing claims: 4419 k after 4494 k the prior week.

 

US: Durable goods orders (Jan.): 3.4% m/m vs 1.1% expected (prior: 1.2% revised from 0.5%)

  • Orders have strongly rebounded from the prior month due to a large surge in orders for non-defense aircrafts over the month.
  • Core orders were up by 0.5% m/m after 1.5% m/m the previous month, which is decent trend. Orders were up for metals and electrical equipment sectors.
  • Shipments were up by 2.1% m/m after 2% m/m; shipments for core orders were up by 2.1% m/m after 1% m/m.
  • Inventories were down by 0.3% m/m after -0.2% m/m the prior month; inventories for core orders were up by 0.3% m/m after 0.4% m/m the prior month.
  • Despite volatile monthly numbers, underlying trend is constructive for capex.

 

US: GDP (Q4-20): 4.1% q/q vs 4.2% expected (prior: 33.4%)

  • While consumption was slightly revised down (from 2.5% q to 2.4% q),  all components of investment were strongly revised up: capex (from initial estimate 24.9% q to 25.7% q), R&D (from 7% q to 8.5% q), residential (from 33.5% q to 35.8% q).
  • Inventories and investment contributions were both higher than in first estimates while net exports contribution was slightly more negative. Final sales were up by 4.4% q after 29.8 % q in Q3-20.

 

US: Pending home sales (Jan.): -2.8% m/m vs 0% expected (prior: 0.5% revised from -0.3%)

  • Sales were lower than expected, but prior month data were revised up.
  • Sales declined in all 4 districts except South. Low inventories and rising yields have driven the sales lower.

 

Eurozone: M3 (Jan.): 12.5% y/y as expected (prior: 12.4% revised from 12.3%)

  • Monetary aggregates remained on a rising trend; M1 was up by 16.4% y/y after 15.6% y/y the prior month.
  • Growth pace of credit to the private sector has slowed down from 4.7% y/y the prior month to 4.4% y/y, reflecting some probable tightening in the credit supply from banks.

 

Eurozone: Industrial confidence (Feb.): -3.3 vs -5 expected (prior: -6.1 revised from -5.9)

  • Business confidence has improved significantly from the prior month.
  • Sentiment has improved on future production and selling prices, but opinions were just less negative on orders, exports and employment.
  • Despite existing headwinds, sentiment in industry continues to improve.

 

Eurozone: Consumer confidence (Feb.): -14.8 as expected (prior: -15.5)

  • Sentiment on current situation has eroded further but opinions were less negative from the prior month on future economic situation and employment.
  • Consumer sentiment should probably not improve significantly before seeing easier restrictions and larger vaccination roll out.

 

Eurozone: Service confidence (Feb.): -17.2 vs -17.4 expected (prior: -17.7 revised from -17.8)

  • Sentiment was slightly less depressed from the prior month but remained at a low level.
  • Views were less negative on future economic situation and employment from the prior month.

 

France: Consumer confidence (Feb.): 91 vs 92 expected (prior: 92)

  • Sentiment has eroded from the prior month due to more depressed sentiment on current situation.
  • Sentiment was stable on future economic situation, but unemployment remained a concern.

 

Germany: GFK consumer confidence (Feb.): -12.9 vs -14 expected (prior: -15.5 revised from -15.6)

  • Consumer sentiment has rebounded more than expected from the prior month.
  • Expectations on future growth, income and willingness to buy have strongly regained from the prior month.
  • The index remained at a depressed level.

 

Italy: Consumer confidence (Feb.): 101.4 vs 101 expected (prior: 100.7)

  • While sentiment on personal situation has decreased further, total sentiment has regained from the prior month due to improving opinions on global and future economic situation.

 

Italy: Manufacturing confidence (Feb.): 99 vs 96 expected (prior: 95.6 revised from 95.1)

  • As seen at the eurozone level, sentiment in industry has rebounded from the prior month on improving future economic situation; views on production and orders were in parallel less negative.

 

Spain: PPI (Jan.): 3.4% m/m vs 1% expected (prior: 0.3%)

  • A strong rebound in prices over the month due to a surge in energy, electricity, food and chemical prices.
Market insight 23.02.2021

Improving US consumer confidence on current situation

US: S&P CoreLogic CS 20-City (Dec.): 10.1% y/y vs 9.9% expected (prior: 9.2% revised from 9.08%)

  • Prices remained on sustained trend; monthly prices were up by 1.25% m/m after 1.46% m/m the prior month.
  • All regions have shown still sustained monthly and yearly trend.

 

US: Consumer confidence (CB) (Feb.): 91.3 vs 90 expected (prior: 89.3)

  • Sentiment has slightly increased on improving opinions on current situation after two-month decline; expectations have slightly decreased from past month high level.
  • In details, views on labor market have improved from the previous month and seemed more balanced; sentiment on future economy and employment has eroded from the prior month.
  • Willingness to buy autos, houses and large items has decreased from the prior month.

 

US: Richmond Fed manufacturing (Feb.): 14 vs 15 expected (prior: 14)

  • Sentiment stayed stable over the month; but details offered mixed picture with rising shipments on the short term but weakening future orders.
  • The index remained higher than its 2019 levels.

 

UK: Unemployment rate (ILO) (Dec.): 5.1% as expected (prior: 5%)

  • Claimant count: 7.2% vs 7.3% the prior month.
  • Jobless claims: -20 k vs -20.4 k the prior month; employment (3-month average): -114 k vs -88 k the prior month.
  • Data were mixed as public program in favor of labor remained in place limiting the rise in unemployed, but underlying trend on employment has shown regular deterioration; the challenge for the government will be to refuel hiring as the economy progressively reopens in the coming months.

 

UK: Average earnings incl. Bonus (Dec.): 4.7% y/y vs 4.1% expected (prior: 3.7% revised from 3.6%)

  • Wages were on the rise, due to lower incomes were part of furloughed workers.
  • Rising trend in wages of remaining active workers were both seen in public and private sectors, while wages have grown more rapidly in services and finances.

 

Switzerland: PPI-import prices (Jan.): 0.3% m/m (prior: 0.5%)

  • Imported prices have increased by 0.5% m/m (due to energy prices) while producer prices were up by 0.2% m/m
  • Yearly trend remained negative at -2.1% y/y after -2.3% y/y the prior month.

 

Eurozone: CPI (Jan.): 0.2% m/m as expected (prior: 0.3%)

  • Final data confirmed the first estimate: the rebound in energy prices and German tax has been limited by decreasing prices of clothes and manufactured goods, while services stayed flat over the month.
  • Yearly trend has rebounded from -0.3% y/y the prior month to 0.9% y/y and core inflation from 0.2% y/y to 1.4% y/y.

 

Italy: industrial orders (Dec.): 1.7% m/m vs -1.3% expected (prior: -1.4%)

  • Sales were also up by 1% m/m after -2% m/m the prior month.
  • Data have rebounded thanks to higher domestic sales and orders, while foreign demand remained depressed in both sectors.

 

Poland: Unemployment rate (Jan.): 6.5% as expected (prior: 6.2%)

  • The unemployment has increased after several months of stable trend around 6.1%.

Further reading

Market insight 26.02.2021

Strong rebound of US personal income (Jan.); falling French consumption (Jan.)

US: Wholesale inventories (Jan.): 1.3% m/m vs 0.4% expected (prior: 0.5% revised from 0.3%)

  • Inventories have increased for wholesalers but declined for retailers over the month.

 

US: Personal income (Jan.): 10% m/m vs 9.5% expected (prior: 0.6%)

  • Disposable income has strongly rebounded (11.4% m/m) due to renewed unemployment and direct supports to households.
  • Separately, wages were up by 0.7% m/m after 0.5% m/m the prior month.

 

US: Personal spending (Jan.): 2.4% m/m vs 2.5% expected (prior: -0.4% revised from -0.2%)

  • Spending has rebounded from the prior month, due mainly to purchases of durable goods (8.4% m/m) while spending on service was modest (0.6% m/m).
  • Saving ratio has strongly rebounded from 13.4% the prior month to 20.5%.

 

US: Core PCE (Jan.): 0.3% m/m vs 0.1% expected (prior: 0.3%)

  • Headline PCE inflation was up by 0.4% m/m due to higher energy prices.
  • Yearly trend in core PCE remained quite stable at 1.5% y/y vs 1.4% y/y the prior month (revised from previous 1.5% y/y).

 

US: Chicago PMI (Feb.): 59.5 vs 61 expected (prior: 63.8)

  • The index was back to its Nov. level, being highly volatile past quarters but remaining at high level; besides uncertainty on economy, bad weather conditions may have weighed down on sentiment with lower production and more delivery concerns.

 

US: Consumer confidence (Michigan) (Feb.): 76.8 vs 76.5 expected (prior: 79)

  • The index was finally better than expected and in first estimate, but it has decreased from the previous month.
  • Sentiment on current situation has slightly decreased, while expectations have decreased more meaningfully (but less than expected, from 74 to 70.7) back to its Nov. level.
  • In details, the picture was mixed: volatile opinions around future personal financial situation, still positive outlook on future economy, but some concern on unemployment and easing in willingness to buy large items from the previous month.

 

France: Consumer spending (Jan.): -4.6% m/m vs -4% expected (prior: 22.4% revised from 23%)

  • With renewed lockdown, sales have sharply decreased for manufactured goods.
  • While spending on autos, food and energy, the sales of other manufactured goods were down by 25% m/m.
  • Sales should remain depressed in Feb. but could improve in March-April on easier restrictions.

 

France: GDP (Q4-20): -1.4% q/q vs -1.3% expected (prior: 18.5%)

  • Slightly more negative revisions to past Q4 GDP.
  • Consumption was down by 5.4% q, while net exports, residential and capex were positive over the quarter.
  • Q1-21 GDP should remain negative, but probably no more than 1% q contraction.

 

France: CPI (Jan.): 0% m/m vs -0.3% expected (prior: 0.3%)

  • While energy prices have strongly rebounded, prices of food and goods have decreased over the month; services were up modestly by 0.1% m/m.
  • Yearly trend stayed quite stable at 0.7% y/y after 0.8% y/y.

 

Spain: CPI (Jan.): -0.6% m/m vs -0.2% expected (prior: -0.4%)

  • First estimates pointed toward still negative trend in prices.
  • Yearly trend turned back negative: -0.1% y/y after 0.4% y/y the prior month.

 

Switzerland: GDP (Q4-20): 0.3% q/q vs 0% expected (prior: 7.6% revised from 7.2%)

  • Activity was more resilient than expected in Q4; consumption was down by 1.5%q but public consumption and capex were positive; exports and imports were both under contraction over the quarter.
  • As lockdown continued, a flat growth or moderate contraction is expected in Q1, unless activity rebounds sharply on easier restrictions in March. GDP has contracted by 2.9% in 2020.

 

Switzerland: KOF (Feb.): 102.7 vs 96.6 expected (prior: 96.5)

  • After several months of declining business confidence, the index has rebounded close to levels seen past Summer.
  • As seen in Germany, confidence in industry is building up despite still existing headwinds.

 

Sweden: GDP (Q4-20): -0.2% q/q vs 0.5% expected (prior: 6.4% revised from 4.9%)

  • Public and private consumption were both in contraction and investment was modestly positive (0.1% q). Net export contribution was more positive thanks to sharp rebound in exports over the quarter.

 

Norway: Unemployment rate (Feb.): 4.3% as expected (prior: 4.4%)

  • After strong rebound the prior month, the unemployment ratio has eased somewhat over the month.
Market insight 25.02.2021

Firmer US durable good orders; improving business sentiment in the eurozone

US: Initial jobless claims (Feb.20): 730k vs 825k expected (prior: 841k revised from 861k)

  • Jobless claims have improved, but data could not be complete due to disruption in some states on bad weather conditions.
  • Continuing claims: 4419 k after 4494 k the prior week.

 

US: Durable goods orders (Jan.): 3.4% m/m vs 1.1% expected (prior: 1.2% revised from 0.5%)

  • Orders have strongly rebounded from the prior month due to a large surge in orders for non-defense aircrafts over the month.
  • Core orders were up by 0.5% m/m after 1.5% m/m the previous month, which is decent trend. Orders were up for metals and electrical equipment sectors.
  • Shipments were up by 2.1% m/m after 2% m/m; shipments for core orders were up by 2.1% m/m after 1% m/m.
  • Inventories were down by 0.3% m/m after -0.2% m/m the prior month; inventories for core orders were up by 0.3% m/m after 0.4% m/m the prior month.
  • Despite volatile monthly numbers, underlying trend is constructive for capex.

 

US: GDP (Q4-20): 4.1% q/q vs 4.2% expected (prior: 33.4%)

  • While consumption was slightly revised down (from 2.5% q to 2.4% q),  all components of investment were strongly revised up: capex (from initial estimate 24.9% q to 25.7% q), R&D (from 7% q to 8.5% q), residential (from 33.5% q to 35.8% q).
  • Inventories and investment contributions were both higher than in first estimates while net exports contribution was slightly more negative. Final sales were up by 4.4% q after 29.8 % q in Q3-20.

 

US: Pending home sales (Jan.): -2.8% m/m vs 0% expected (prior: 0.5% revised from -0.3%)

  • Sales were lower than expected, but prior month data were revised up.
  • Sales declined in all 4 districts except South. Low inventories and rising yields have driven the sales lower.

 

Eurozone: M3 (Jan.): 12.5% y/y as expected (prior: 12.4% revised from 12.3%)

  • Monetary aggregates remained on a rising trend; M1 was up by 16.4% y/y after 15.6% y/y the prior month.
  • Growth pace of credit to the private sector has slowed down from 4.7% y/y the prior month to 4.4% y/y, reflecting some probable tightening in the credit supply from banks.

 

Eurozone: Industrial confidence (Feb.): -3.3 vs -5 expected (prior: -6.1 revised from -5.9)

  • Business confidence has improved significantly from the prior month.
  • Sentiment has improved on future production and selling prices, but opinions were just less negative on orders, exports and employment.
  • Despite existing headwinds, sentiment in industry continues to improve.

 

Eurozone: Consumer confidence (Feb.): -14.8 as expected (prior: -15.5)

  • Sentiment on current situation has eroded further but opinions were less negative from the prior month on future economic situation and employment.
  • Consumer sentiment should probably not improve significantly before seeing easier restrictions and larger vaccination roll out.

 

Eurozone: Service confidence (Feb.): -17.2 vs -17.4 expected (prior: -17.7 revised from -17.8)

  • Sentiment was slightly less depressed from the prior month but remained at a low level.
  • Views were less negative on future economic situation and employment from the prior month.

 

France: Consumer confidence (Feb.): 91 vs 92 expected (prior: 92)

  • Sentiment has eroded from the prior month due to more depressed sentiment on current situation.
  • Sentiment was stable on future economic situation, but unemployment remained a concern.

 

Germany: GFK consumer confidence (Feb.): -12.9 vs -14 expected (prior: -15.5 revised from -15.6)

  • Consumer sentiment has rebounded more than expected from the prior month.
  • Expectations on future growth, income and willingness to buy have strongly regained from the prior month.
  • The index remained at a depressed level.

 

Italy: Consumer confidence (Feb.): 101.4 vs 101 expected (prior: 100.7)

  • While sentiment on personal situation has decreased further, total sentiment has regained from the prior month due to improving opinions on global and future economic situation.

 

Italy: Manufacturing confidence (Feb.): 99 vs 96 expected (prior: 95.6 revised from 95.1)

  • As seen at the eurozone level, sentiment in industry has rebounded from the prior month on improving future economic situation; views on production and orders were in parallel less negative.

 

Spain: PPI (Jan.): 3.4% m/m vs 1% expected (prior: 0.3%)

  • A strong rebound in prices over the month due to a surge in energy, electricity, food and chemical prices.
Market insight 24.02.2021

Strong US new home sales; German Q4-20 GDP growth stronger than expected

US: New home sales (Jan.): 923k vs 856k expected (prior: 885k revised from 842k)

  • Despite rising long bond yields, trend remained sustained in new home sales after past month upward revision.
  • Sales were solid in all regions and inventories were slightly decreasing; prices remained sustained: median prices have slightly declined from the prior month, but mean prices remained on the rise; both prices remained on a sustained yearly trend (6.5% y/y for mean prices; 5.3% y/y for median prices).

 

France: Business confidence (Feb.): 90 vs 91 expected (prior: 91 revised from 92)

  • Business sentiment has eroded over the month, with lower opinions on production and inventories.
  • Nevertheless, views on order books and exports were less negative than the prior month, and own view on production and prices were more positive.
  • The index is still well below its pre-COVID level and has stabilized at mixed level given mixed picture: still downside risk on the short term but rising optimism on future situation.

 

Germany: GDP (Q4-20): 0.3% q/q vs 0.1% expected (prior: 8.5%)

  • GDP growth was better than expected in Q4; consumption declined by a strong 3.3% q/q, but investment was up, thank to construction sector. Contribution from investment, net exports and inventories were positive over the quarter, balancing the contraction in consumption.
  • Q1-21 is expected to less benefit from inventory support and could be negative on a quarterly basis, as consumption should stay under contraction due to lockdown.

 

Brazil: CPI (Feb.): 0.48% m/m vs 0.5% expected (prior: 0.78%)

  • Food and housing prices have slowed down over the month, but transport and education costs were on the rise.
  • Yearly trend has increased further, from 4.3% y/y the prior month to 4.57% y/y.

 

Brazil: Current account (Jan.): -7253 M$ vs -7500 M$ expected (prior: -5288 M$ revised from -5393 M$)

  • Current account deficit has increased; in parallel, foreign direct investment has increased over the month.