The most important events and reports on the economy, central banks and politics from the Dow Jones Newswires program
Markit: German economy gaining strength in January
Contrary to expectations, growth in the German economy accelerated in January. The IHS Markit composite index of private sector production – manufacturing and services combined – improved to 54.3 from 49.9 in the previous month, according to data from the first release for the month. Above 50 points, the economic barometer signals growth, below it a contraction.
DZ Bank: Rise in German service PMI is amazing
The chief economist at DZ Bank, Michael Holstein, finds the increase in the Purchasing Managers’ Index (PMI) surveyed in the German service sector “amazing”. “While the restrictions have been tightened in recent weeks, relief is still spreading among the companies surveyed,” Holstein wrote in a comment. In the industry, the burden of the disrupted supply chains appeared to have eased in recent weeks according to the survey, although international data did not indicate that the worst was over here.
Bundesbank: German GDP falls slightly in the fourth quarter
According to estimates by the Deutsche Bundesbank, German gross domestic product (GDP) did not fall sharply in the fourth quarter of 2021. In its current monthly report, the Bundesbank writes: “Germany’s real gross domestic product (GDP) is likely to have fallen somewhat in the final quarter of 2021.” It is apparently somewhat more optimistic about the economic situation at the end of 2021 than the Federal Statistical Office (Destatis), which on January 14 had forecast a drop in GDP of 0.5 to 1.0 percent.
Bundesbank: So far, higher temperatures have hardly reduced German GDP
Since 1960, the mean annual temperature in Germany has risen more sharply than in other countries in the euro area. According to calculations by the Deutsche Bundesbank, this has hardly affected economic performance so far. The balance is less good in some southern European countries, whose “starting temperature” was higher than the German one. Two euro countries even benefited from climate change.
Markit: Eurozone economy continues to lose momentum
Eurozone growth slowed for the second straight month in January as the spread of the omicron flavor slowed consumer services in the region. The composite index for production in the private sector – industry and service providers together – fell to 52.4 points from 53.3 in the previous month, as the IHS Markit Institute reported in the course of the first publication. Economists had predicted a drop to 52.7 points.
Commerzbank: Eurozone economy growing again in spring
Commerzbank economist Christoph Weil expects the euro area economy to grow again in the spring. “With the displacement of the delta variant by the omicron variant, the risk situation for the health of the population has recently changed decisively,” writes Weil in a comment on the decline in the euro area purchasing managers’ index (PMI).
ZVEI expects 4% production growth in the electrical and digital industry
After the year 2021 was very successful overall for the electrical and digital industry according to its industry association ZVEI, the association is also confident for 2022. “As of today, we are assuming a production increase of 4 percent,” said ZVEI President Gunther Kegel. However, he also pointed to major uncertainties in this year’s forecast. “As one of the few industries, it has managed to more than make up for the losses from the previous year,” he said with a view to 2021.
NATO member states strengthen military presence in Eastern Europe
Because of tensions with Russia, a number of NATO member states are increasing their military presence in Eastern Europe. The alliance said that additional combat aircraft and naval vessels should be deployed in the Baltic Sea and in Eastern European countries such as Lithuania and Bulgaria. The background to this are fears of a Russian invasion of Ukraine.
EU does not want to withdraw diplomats from Ukraine for the time being
Unlike the United States, the European Union does not want to withdraw its diplomatic personnel from Ukraine for the time being. Before a meeting with the foreign ministers of the 27 member states in Brussels, EU foreign policy chief Josep Borrell said the EU had not yet received any information about the background to the US decision. He is relying on the planned meeting with US Secretary of State Antony Blinken via video conference later in the day.
Right-wing nationalist party wins election in North Cyprus
In the parliamentary elections in the internationally unrecognized Turkish Republic of Northern Cyprus (TNCR), President Ersin Tatar’s pro-Turkish right-wing nationalist party won the majority of the votes. According to preliminary official results, the UBP party reached 39.5 percent on Sunday. As after the last vote in 2018, the UBP would be dependent on a coalition partner in order to be able to govern.
Talks by Western officials with Taliban started in Oslo
For the first time since the Taliban returned to power in Afghanistan, Western representatives have met with an official Islamist delegation on European soil in the Norwegian capital of Oslo. The Taliban delegation, led by Foreign Minister Amir Chan Muttaki, met with representatives from the USA, the EU and several European countries such as France and Germany. The talks take place behind closed doors.
+++ economic data +++
France/Purchasing Managers Composite Index Jan 52.7 (1st Aug)
France/Purchasing Managers Composite Dec was 55.8
UK/PMI Composite Jan 53.4 (1st Aug)
UK/PMI Composite Jan PROG: 54.3
UK/PMI Composite Dec was 53.6
DJG/DJN/AFP/apo
(END) Dow Jones Newswires
January 24, 2022 07:30 ET (12:30 GMT)