The most important events and reports on the economy, central banks and politics from the Dow Jones Newswires program
Contrary to expectations, German exports rose in December
The German economy increased its exports in December despite delivery bottlenecks and a shortage of materials. According to the Federal Statistical Office (Destatis), exporters sold 0.9 percent more abroad than in the previous month after calendar and seasonal adjustment. In contrast, economists surveyed by Dow Jones Newswires had expected a drop of 0.9 percent. Compared to the same month last year, exports were 15.6 percent higher. Imports rose 4.7 percent in December compared to the previous month. For the year as a whole, there was an increase of 27.8 percent.
DIHK sees no reason for euphoria in export figures
The Association of German Chambers of Industry and Commerce (DIHK) reacted cautiously to the latest export figures. “The only slight increase in exports in December is by no means a reason for euphoria,” explained Volker Treier, head of the DIHK for foreign trade. “2021 will therefore remain a mixed year for the German export economy.” Although the pre-crisis level could be reached again, delivery bottlenecks and price increases for important preliminary products and raw materials as well as logistics problems in global trade prevented the necessary, sustained strong export growth.
BDI: Record year in exports should not lead us down the wrong path
The Federation of German Industries (BDI) has warned against exaggerated hopes after the new export figures. “The record year in exports shouldn’t lead us down the wrong path,” said BDI Managing Director Joachim Lang. Disruptions in global supply chains and high logistics costs continued to weigh on foreign trade and hampered production. A short-term improvement of the problems is not in sight.
BGA: Foreign trade despite Corona with very good results
According to the latest German foreign trade figures, the Federal Association of Wholesale, Foreign Trade and Services (BGA) has emphasized the strength of the German export economy. “After the biggest slump since the financial and economic crisis last year, foreign trade closed 2021 with the best result in recent decades,” stated BGA President Dirk Jandura.
VP Bank: German exports dependent on geopolitics
The chief economist at Liechtenstein’s VP Bank, Thomas Gitzel, draws attention to the international dependency of the German economy. Functioning supply chains and good foreign policy relations are important for the country. “Geopolitical conflicts, such as the current tensions on Ukraine’s eastern border, are affecting the minds of many exporters,” says Gitzel.
ING: Export recovery should continue
ING Europe Chief Economist Carsten Brzeski expects the gradual recovery of German exports to continue. “The export order books are still well filled. However, industrial production must first pick up again before exports pick up,” explained Brzeski in a comment. “It’s simple: without new production, there will be no new exports. In this respect, the slight pick-up in industrial production in December is a glimmer of hope, which supports our view of a more sustained recovery in German exports later in the year.” In addition, the strong growth in imports bodes well for future exports.
IMK sees further robust export growth
According to the latest export figures, the Institute for Macroeconomics and Business Cycle Research (IMK) expects continued robust export growth. “The robust growth in exports at the end of the year shows that the German economy is once again being pushed by the export economy, while the domestic economy is stumbling – also due to the Corona wave in December,” explained the scientific director of the IMK, Sebastian Dullien. At the same time, export growth indicates “that the problems with the primary products are gradually improving”.
IWH: Insolvency figures fell in January
After the number of insolvencies of partnerships and corporations had risen steadily in the preceding months, calculations by the Leibniz Institute for Economic Research in Halle (IWH) showed a decline in January. The number of jobs affected has also fallen slightly. “A wave of insolvencies is not to be expected in the next few months,” the institute said. According to the IWH insolvency trend, the number of insolvencies of partnerships and corporations in January was 600 and thus 16 percent below that of the previous month and 13 percent below that of the same month last year.
Nagel: Interest rates could rise this year
According to ECB Council member Joachim Nagel, the European Central Bank (ECB) could raise interest rates this year. In an interview with the weekly newspaper Zeit, Nagel admitted that the sharp increase in inflation was mainly triggered by factors over which the European Central Bank (ECB) has no influence. But he also saw strong demand at the plant. The new President of the Deutsche Bundesbank apparently assumes that the ECB inflation forecasts due in March will be higher than in December.
DZ Bank: ECB raises deposit rate to -0.25% in 2022
DZ Bank analyst Christian Reicherter expects the European Central Bank (ECB) to raise its rate for bank deposits this year from the current minus 0.50 percent “in two small steps” to minus 0.25 percent. “In this context, we can imagine that net new purchases will be noticeably reduced in the coming months before they are then discontinued in September,” writes Reicherter in a comment. The continued failure to meet the inflation target harbors the risk that longer-term inflation expectations will become unstable.
Pimco: ECB’s forward guidance could lose utility
The chief economist of the asset manager Pimco, Joachim Fels, considers a change in the forward guidance on the ECB’s bond purchases under the APP program possible for March, which would enable an interest rate hike in the current year. The fact that the credibility of such forward-looking statements would lose credibility as a result would not be a problem for the European Central Bank (ECB) in an environment of stronger economic and price fluctuations, says Fels.
OECD leading indicator points to slowing growth
The leading indicator of the OECD points to slowing growth in several large economies. As reported by the Organization for Economic Cooperation and Development (OECD), the indicator for the entire OECD area fell by 0.07 percent to 100.5 points in January. The index also fell by 0.07 percent in December and November.
DIW: Electrification the cheapest way to climate neutrality
According to a study, a rapid expansion of renewable energies and the extensive electrification of all sectors of the economy based on this is the most cost-effective option for achieving climate neutrality in Europe. The study by the German Institute for Economic Research (DIW) and the Brussels think tank Bruegel shows “that the direct use of electricity from renewables is cheaper and more efficient for end consumers such as companies and households than indirect electrification, for example via synthetic gases or hydrogen,” said Study author Franziska Holz.
US House of Representatives approves interim budget to avert shutdown
For the third time in less than five months, the US House of Representatives passed an interim budget to avert a so-called government shutdown. In addition to MPs from US President Joe Biden’s Democratic Party, 51 Republicans also voted in favor of the transition budget. It is expected that the law will also be approved by the Senate in the coming days.
+++ economic data +++
US/MBA Market Index week ended Feb 4 -8.1% to 567.7 (previous week: 617.8)
US/MBA Purchase Index week ended Feb 4 -9.6% to 282.3 (previous week: 312.2)
US/MBA Refinance Index week ended Feb 4 -7.3% to 2183.5 (previous week: 2355.4)
Brazil consumer prices Jan +0.54% (Dec: +0.73%)
Brazil consumer prices 12-month rate Jan +10.38% (Dec: +10.06%)
Mexico Consumer Prices Jan +0.59% (PROG: +0.55%) m/m
Mexico Core Consumer Prices Jan +0.62% (PROG: +0.58%) m/m
DJG/DJN/AFP/apo
(END) Dow Jones Newswires
February 09, 2022 07:30 ET (12:30 GMT)