Despite the weak sentiment in global markets over the last two weeks, the situation seems to be slowly improving. Today, we no longer observe declines in contracts in the USA, and indexes in Europe have stabilized. The dollar also remains in consolidation, curbing recent increases. Although the situation globally seems to be stable, the situation in Germany does not inspire optimism. Incoming economic data are performing poorly. Both the latest data on retail sales and today's data on factory orders. Only the trade balance turned out better than expected, but nominal values are still much lower than, for example, readings from 12 months ago. Let's take a look at the latest macro readings from Germany:
In November, German factory orders modestly increased by 0.3%, falling short of the expected 1.0% rise and partially reversing a 3.8% decline from October. Despite this, improved trade terms suggest a potential short-lived euro area recession. While domestic orders increased, orders from the euro area and overseas declined, indicating a mixed economic outlook.
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In November, Germany's trade surplus expanded to €20.4 billion, surpassing expectations, driven by a 3.7% increase in exports and a 1.9% rise in imports from the previous month. Despite these monthly gains, both exports and imports showed a year-over-year decline. Trade with EU countries saw a notable increase, particularly exports to the US, China, and the UK, with China being the largest source of German imports.
Highlights of the day:
- The GDL train drivers' union in Germany has announced a strike from January 10 to 12, escalating a wage dispute with Deutsche Bahn. The strike, which includes cargo train drivers starting on January 9, follows a 24-hour strike last month after failed negotiations.
- GDL demands reduced working hours for shift workers, a monthly pay increase, and a one-time inflation compensation bonus. In response, Deutsche Bahn intends to seek an injunction to halt the strike.
- Michael Brecht, the head of Daimler Truck's works council, has criticized the company's long-term savings goals as unrealistic, particularly the plan to cut fixed costs, investments, and R&D spending by 15% by 2025. He suggests reevaluating production processes rather than relocating to lower-cost countries like Romania. While acknowledging the company's recent strong performance, Brecht advocates for more investment in areas like R&D and for Daimler to produce its own battery cells in Germany.
DE40 index is gaining 0.25% today. Despite weak data from the German economy, the increase is supported by better sentiment in foreign markets. Source: xStation 5
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