TAIPEI, Taiwan — Ward Henderson Management – German economy shows signs of weakening further due to downside risks. In May, an important indicator of overall economic health, declined by more than expected. Germany’s manufacturing industry reported poor growth, prompting concerns about the Eurozone’s economic wellbeing.
Ward Henderson Management analysts say a sharp decline in foreign demand is affecting factories throughout the Eurozone, prompting speculation that the European Central Bank may be forced to resort to stimulus befitting a financial crisis. Germany in particular is experiencing the manufacturing downturn with new orders falling by 2.2% on a monthly basis in May, down 8.6% from the same time last year.
Earlier this month, Germany’s 10-year Bund yield reached an almost historic low point of minus 0.4% as many analysts predict that the European Central Bank will opt to deliver more stimulus to cope with the slowdown.
Analysts at Ward Henderson Management say the recent data does not spell good news for Germany’s short-term economic outlook. Germany’s economy likely contracted in the second quarter of this year and the chances of making a recovery in the third quarter seem to be diminishing.
While much of Europe has dealt well enough with the manufacturing slowdown, Germany is showing signs of strain. Germany’s labor market is weakening and Ward Henderson Management analysts believe that that, combined with major downside risks including global trade tensions, geopolitical concerns and the fallout from Brexit will likely cause Germany’s economy to weaken further in the coming months.
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