Because the sluggish German economy will wake up the ECB
What will be the impact of industrial orders in Germany on the ECB's monetary policy. The comment by Tomasz Wieladek, Chief European Economist by T. Rowe Price
German industrial orders increased 0.2% in February. The figure is weaker than the 0.8% increase expected by consensus. In recent months, data on industrial orders in Germany have been difficult to interpret due to large orders, which led to a contraction of 11.4% in January. However, the same large orders supported a similar increase in December. A less volatile three-month comparison suggests that orders to the manufacturing sector in Germany increased by 2.8%. In fact, they fell 0.8% if you exclude larger orders. Overall, in short, it is difficult to extract a clear signal from the data of the last two months.
GERMAN INDUSTRY REMAINS ON THE GROUND
However, one thing is clear. German industry remains flat, regardless of whether orders, actual production or surveys are considered. The German economy, Europe's manufacturing engine, remains very weak in the first quarter.
FRANCE IS NOT IN A GOOD PLACE TOO
The French manufacturing sector shows a similar picture. The economic performance of these two economies will be weak this year due to fiscal consolidation.
ITALY AND SPAIN ARE BETTER: THE ECB MUST TAKE IT INTO ACCOUNT
On the other hand, Italy and Spain are performing better thanks to the strength of the services sector. The ECB will have to take all these factors into account.
However, in the past, the German and French cycles have led the other countries. As a result, we believe today's data contributes to increasing evidence that the ECB could initiate a cutting cycle in June and cut 4-5 times this year.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/bce-economia-germania/ on Sun, 07 Apr 2024 05:53:30 +0000.