Cycle continues to deteriorate: weaker than expected IFO survey in Germany, weak recovery in China, slowdown in US

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Renta 4: European markets open flat (Eurostoxx futures +0.3%, S&P futures +0.2%). In the background, promises of new stimulus measures in China by Prime Minister Li Qiang that could accelerate its economy in 2Q23 after the weakness shown by the latest data, although without any specifics.

On the macroeconomic front, we highlight yesterday’s worse-than-expected deterioration in Germany’s IFO survey, weighed down by a weaker-than-expected opening of the Chinese economy, the US slowdown and the tightening of financial conditions, which points to additional weakness in 2Q23 and 3Q23 after two consecutive quarters of negative growth (technical recession: GDP -0.5% in 4Q22 and -0.3% in 1Q23). Despite this weakness in the German cycle, inflation remains elevated (on Thursday, June CPI could rebound to 6.3% year-on-year vs. 6.1% previously, in what would be its first acceleration since the beginning of the year), making things even more difficult for the ECB.

Today in the US, the Conference Board’s consumer confidence report will be released, with stable expectations, but with downside risk in the expectations component, at already depressed levels.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.