Germany: Industry Sector Outlook
First leg of the recovery close to completion, consumer-related second leg in sight The German economic upswing seems more resilient to the significant fiscal tightening this year than expected. A sector view implies that consumer-related service industries jointly lead the momentum of the economy, while trade and construction businesses seem to have a suffered a VAT related setback in demand. But medium-term growth momentum in the German economy seems intact, as improved supply conditions in recent years have boosted competitiveness. This is based on of recent surveys of the DIHK – presented 04Apr – and the ifo institute together with official statistics. The pattern of the current upswing is more reminiscent of the more stable cycles of the 1980s rather than the seesaw pattern of the last 15 years since unification.
Asset conclusions: economic strength seems priced into export and capital stocks, some further catching-up of consumer stocks and financials possible
© Graham Bishop
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