The low point has been overcome

The worst slump in the Corona crisis seems to be over, data on traffic and electricity show more stability again. But they also show that the German economy is still a long way off the hook.

The corona crisis hit German industry hard.

Dhe provisional low point in the Corona crisis seems to have been overcome in Germany. After several business climate surveys recently signaled positive sales expectations for companies, the Munich-based Ifo Institute followed up on Tuesday with improved export prospects. The barometer, which is based on around 2,300 information from industrial companies, rose significantly in May from minus 50.2 to minus 26.9 points. There has not yet been such an increase within a month. The greatest optimism was found in the auto industry.

Nonetheless, the unchanged negative indicator value indicates that the industry is initially still anticipating a decline in exports – just less than in April. So there can be no question of a return to normal values. The same applies to the Ifo business climate index: coming from a historically low level, it rose solely because of improved future prospects. The assessment of the situation, on the other hand, deteriorated even further.

Caution should also be exercised with other sentiment indicators. At first glance, the barometer published by the Gesellschaft für Konsumforschung on Tuesday suggests a somewhat lively consumer mood. Despite a plus of 4.2 points, the index value remains deep red with minus 18.9 points.

Halfway there

However, other, “harder” indicators such as traffic data and electricity consumption are also signaling a bottoming out with a slightly upward trend. Recently, economic researchers have been looking more and more, because the “hard” main indicators such as incoming orders and production in the industry as well as the first estimate of the gross domestic product with all its components (consumption, investment, foreign trade) are only available with a delay of a few weeks – and traffic data and electricity consumption at the same time are closely related to the main indicators.

The economic low point can therefore be located in the first half of April. Up to this point, a steady decline in economic activity can be observed. Around the easing measures decided after Easter, including the first store openings on April 20, things then picked up again.

The mileage index published by the Federal Statistical Office, which measures the kilometers driven by trucks on toll roads, is now again at around 107 points (moving weekly average, adjusted for calendar and seasonal special effects). This means that the return to the pre-crisis level of around 115 points is halfway through after the mileage index fell to 95 points at the beginning of April.

Things haven’t really improved since then

Data from local public transport, which analysts at Commerzbank have evaluated, confirm this trend. The same applies to the number of customers in retail and catering. “Restaurant visits half as often as a year ago,” write the economists, referring to the reservation figures on online platforms. Accordingly, there has been “a dynamic upward movement” since mid-May.

To attest a dynamic upward trend in the economy as a whole is definitely premature in terms of electricity consumption (see graphic). Some energy suppliers such as EWR from Rheinhessen report a significant increase in electricity demand and attribute this to the restart or intensification of industrial production in their region – since May 11, the consumption level of the previous year in Rheinhessen has even been exceeded, according to EWR.

Image: FAZ graphic Kaiser

Nationwide, electricity consumption has so far not returned to the normal level, even though it had reached its temporary low in the first half of April in the moving, holiday-adjusted weekly average of the energy association BDEW. But things have not really improved since then: for around six weeks, electricity consumption in Germany has stagnated at around minus 10 percent below the average of previous years. This shows how deeply the economy is still in crisis.

According to experts, the fact that more electricity has been consumed privately since mid-March, for example because people spend more time at home and work from there, at most dampens the general slump in demand. Because the manufacturing industry, which is far below normal capacity utilization, is by far the largest electricity consumer in this country with just under 46 percent. The rest of the economy accounts for 27 percent and private households only a quarter.