The German economy is at a difficult moment – and it is not a moment, because Germany fell into a hole months ago and cannot get out of it. We had very weak hard economic data, there was also surprising information from the automotive industry (including primarily from Volkswagen, which is on the one hand the pearl in the German economic crown, and on the other this economy in a nutshell). At the beginning of the new week, economic situation readings appeared. It does not look good.
Germany. Weak PMI readings
According to the preliminary reading of the PMI for German industry in September, it fell to 40.3 points from 42.4 points, much more than expected. It is the lowest in 12 months. The key thing is, however, that we are talking about a level of 40 points (and at the beginning of this rate) – any indication below 50 points means the sector is shrinking. The same indicator for services did indeed find itself above this limit, but not by much. It amounted to 50.6 points, compared to the forecasted 51 and 51.2 points a month ago.
Recession on the horizon
“The risk of a recession is rising in Germany as the preliminary PMI readings signal a deepening contraction in September, driven largely by a worsening manufacturing sector,” said Chris Williamson, chief economist at S&P Global Markit Intelligence, which calculates the PMI readings.
In the second quarter of this year, the German economy has already fallen into the red, and there are many indications that this may repeat itself in the third quarter. And two quarters of GDP decline in a row is already an indicator of a technical recession. Polish economists from Pekao SA note in a quick commentary on X that “this is already the third recession wave in the last few years” in Germany.
PMI indicators for the entire eurozone do not look too good, indicating the worst business sentiment this year (for 8-9 months). This caused a reaction on the currency market – the euro weakened against the dollar. This movement also translated into the złoty quotes (the change is dynamic, but nominally still small – from PLN 3.82 before the publication of the data to PLN 3.85 after it, and currently PLN 3.84 – here it is possible that the disappointing GUS data from the Polish economy could have had an impact).