📋 Tender Overview
WEAK OUTLOOK FOR THE SECOND HALFThe economic mood in Germany has deteriorated significantly. In the reporting month of July almost all indicators developed negatively industrial production fell especially in the energy-intensive areas. New orders posted their sixth straight decline. Foreign trade also developed weakly with exports declining somewhat more than imports. The only ray of hope remains slightly positive real retail sales which however cannot compensate for the declines of the past few months.Overall the energy price shock that resulted from the reduction in Russian gas supplies is affecting the German economy more and more. Many companies and consumers expect prices for electricity and gas to continue to rise. Even if there is unlikely to be any physical rationing of gas volumes in winter the high prices are making many production processes unprofitable and demand for the manufactured products is falling. The inflation rate which according to preliminary calculations was 7.9 in August is likely to rise again in the coming month because the reduction in the energy tax on fuel and the nine-euro ticket will then no longer have a price-dampening effect.After all there are first signs of relaxation in the global supply chains. The number of companies complaining about material shortages fell significantly in August. Container freight rates are also gradually falling. However this could also be due to the slowdown in the global economy and can therefore not be interpreted exclusively as positive news.After a solid first half of the year the German economy is threatened with a difficult second half of 2022. The complete cessation of gas deliveries via Nord Stream 1 can now be coped with better than a few months ago because other suppliers have stepped in in the meantime and demand has increased prices has reacted so that the gas storage facilities are now quite full. At the same time the high gas prices that still have to be paid in Germany result in a welfare loss since the terms of trade in the German economy have deteriorated significantly. Against this background it cannot be ruled out that economic output will stagnate or decline in the second half of the year.GLOBAL ECONOMIC RECOVERY STALLSThe hard indicators for the global economy are only available with a time lag of three months. In June global industrial production was still trending upwards at 1.2 month-on-month even though world trade was already faltering at the time with a rate of change of -0.1. The mood indicators at the current edge are signaling a further cooling of the global economic situation. The index of SP Global formerly IHS Markit fell below the growth threshold of 50 points for the first time since spring 2020 - when the world was firmly in the grip of the first corona wave. The decline in the service sector was somewhat stronger than the decline in the manufacturing sector. The survey participants expect the global economic environment to be difficult in the coming months.DAMPER FOR GERMAN FOREIGN TRADEIn July nominal exports of goods and services fell by a seasonally adjusted 2.2 on the month. Nominal imports of goods and services also declined. Compared to June they were down 0.6. Due to the upswing in foreign trade in recent months however the decline is starting from a high level In a three-month comparison which is less susceptible to fluctuations both exports and imports are still clearly in the black.It is also interesting that for the first time in seven months export prices increased slightly more than import prices. Since almost all of the energy is imported and the RUS-UKR conflict caused major price increases Germany suffered from sharply rising import prices and a deterioration in the terms of trade in the last six months. The current account balance in the period from January to July was only around half as high as in the previous year.The outlook for foreign trade remains mixed. The indicators are currently painting an inconsistent picture.On the one hand there are signs of an initial easing of the supply bottlenecks that have weighed on the global economy in the course of the recovery from the Corona crisis. Container freight rates are gradually falling. In addition in an ifo survey on material shortages in industry only 62 of the companies surveyed say that they are affected by bottlenecks. This is the lowest level in over a year.On the other hand the easing of supply bottlenecks could also be a sign of weak demand in an environment of economic slowdown. In the coming months the energy price shock will gradually permeate the economy. Price guarantees on favorable terms are gradually being replaced by new contracts which are often significantly more expensive. It remains to be seen how this will affect the production of export-oriented German industry. In any case the ifo export expectations fell to a five-month low in August.The current weakness of the euro also has far-reaching implications for German foreign trade. Since the beginning of the year the euro has lost around 12 of its value against the dollar and the currencies are currently being exchanged at a ratio of 11. Basically a weak euro makes German exports abroad cheaper which is why there are new opportunities on international markets for companies based here. However e.g. For example oil is mainly traded in dollars which is why a weak euro increases the energy price burden in Germany. Overall the weak euro is a double-edged sword for the German economy.INDUSTRY HAS A WEAK START TO THE THIRD QUARTERProduction in the manufacturing sector fell slightly in July by 0.3 compared to the previous month. Industrial emissions fell by 1.0 month-on-month. In particular the manufacture of consumer goods was in the red -2.4. Production in construction expanded by 1.4. There was noticeable growth of 2.8 in the energy sector. The energy-intensive areas.
