Wachstumskurve mit Kugelschreiber symbolisiert die wirtschaftliche Lage.

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  • The latest figures are indicative of a two-pronged economic development. While the domestic economy has slowly picked up as a result of the slight rise in real wages and a continued positive trend in investment activity, foreign demand continues to slow down due to the weakness of the global economy.
  • Industry again saw a significant drop in output of 1.8%, whereas output in the construction sector increased by 2.6%. After stabilising in the previous month, the particularly energy-intensive industrial sectors again recorded a decline of 0.6%. Following a strong increase in June (+7.6%), new industrial orders were down sharply in July (-11.7%). However, the decline is primarily attributable to one-off special factors resulting from large-scale orders dating from the previous month. Excluding large-scale orders, orders grew by 0.3%.
  • Real retail sales excluding motor vehicles declined slightly again in July (-0.8%). The less volatile three-month comparison, however, still showed an increase of 1.8%. The leading indicators currently still point to restrained growth of consumer spending in the coming months.
  • Consumer price inflation continued its downward trend in August. The inflation rate was 6.1% (July: +6.2%), while core inflation remained at 5.5%. Food prices again rose at a disproportionately high rate (+9.0%) compared with the same month a year ago, although upward pressure on prices continued to ease (July: +11.0%).
  • The cyclical weakness of the economy is also increasingly affecting the labour market. Unemployment rose noticeably by 18,000 persons in August on a seasonally adjusted basis. The sluggish development of the leading indicators from the Institute for Labour Market Research (IAB) and ifo in August continue to suggest slowing momentum in the labour market. Overall, however, the labour market remains largely stable despite the current economic weakness.
  • Current leading indicators, such as order activity and business climate, and also the subdued development of the global economy point to continued weakness in the third quarter; a noticeable economic recovery is not expected until the turn of the year 2023/24 at the earliest.


Following the recessionary trend in the winter half of 2022/23, GDP stagnated in the early summer. The detailed data published by the Federal Statistical Office reveal that the economic development is currently two-pronged. This said, the domestic economy is showing first rays of hope: as a result of the increase in the minimum wage, higher collective wage agreements and tax-free inflation compensation premiums, nominal wages in the second quarter showed the highest increase since the start of the time series in 2008. Compared with the previous year, price-adjusted effective wages were slightly positive again for the first time in two years. The lower income groups in particular benefited from this, which helped stabilise private consumption. This trend is likely to continue in the further course of the year as inflation slows, leading to a gradual recovery in consumer spending. It is also encouraging that investments in machinery, plant and equipment, and construction continued to expand in the second quarter, thus providing positive impetus for growth.
By contrast, the current outlook for foreign trade is much less favourable: the global economy has recently lost momentum, which is reflected by a noticeable decline in exports and a negative contribution to growth from foreign trade in the second quarter. In particular, the economic slowdown in China, an important trading partner for German foreign trade, has had a strong impact. The recent declines in purchasing managers’ indices, less orders from abroad and worsening export expectations do not suggest a turnaround in the coming months.
Overall, current economic indicators do not yet point to a sustained recovery in the coming months; cyclical economic development is therefore likely to remain very weak in the third quarter and is not expected to pick up speed before the turn of the year.

Global industrial output increased slightly in June (+0.4%) compared with the previous month, whilst global trade declined again (-0.7%). Leading indicators on world trade point to uneven economic developments in the coming months.
Global container throughput (RWI/ISL Container Throughput Index) fell again somewhat in July (seasonally adjusted) from 123.3 to 121.9 points as container throughput slowed worldwide. In relative terms, the North Range index fell more sharply than throughput at Chinese ports. By contrast, ship movement data from the Kiel Trade Indicator sent out slightly positive signals for global trade in August (+0.9%).

The sentiment indicator of S&P Global fell to 50.6 points in August and is within the “growth-neutral” threshold. While sentiment in the manufacturing sector recently rose again slightly to 49.0 points, the mood among service providers continued to deteriorate. Accordingly, the outlook for the global economy remains weak.

The latest forecast average from Consensus Economics predicts economic activity in China to be 5.3%, thus it is likely to be much weaker this year than previously expected. Growth in the eurozone is also expected to be rather modest, at +0.6%. Even though the outlook for the US has recently brightened somewhat (2023: +1.9%), global demand will remain restrained in the next future, as also pointed out by the latest forecasts of the leading German economic research institutes.


Following a 1.4% increase in June, nominal exports of goods and services fell by -1.8% month-on-month in July (adjusted for price, seasonal, and calendar-related factors). The three-month comparison, which is less susceptible to fluctuations, shows a decline of -1.2%. Exports of goods to the EU (+0.5% vs. June 2023) and especially to the eurozone (+1.7%) continued to rise, while deliveries of goods to non-EU countries declined significantly (-2.5%). However, demand from China was up in July (+1.2%) despite the gloomy economic outlook, and exports to the US also increased (+5.2%).
Nominal imports of goods and services fell again in July compared with the previous month (July: -0.8%, June: -1.3%). The three-month comparison also clearly showed negative growth for imports (-1.6%). Deliveries of goods from the EU expanded by +2.9%. By contrast, imports from other countries were slightly lower than in the previous month (-0.2%), not least because imports from China fell significantly (-5.8%).

As exports fell more sharply than imports, the monthly trade surplus fell from €15.2 billion in June to €13.3 billion in July.
The foreign trade prices are continuing to positively reflect the falling energy and raw materials prices and the improvement of the supply chain situation. At +0.1%, the terms of trade improved only slightly in July compared with the previous month, as import prices declined by -0.5%, only a little more than export prices (-0.3%). In real terms, the decline in exports and imports is therefore likely to have been less pronounced.
The leading indicators suggest that exports will initially remain weak. The ifo export expectations have been clearly negative since June and deteriorated further in August (from -5.9% to -6.3 points). As regards German exports (in real terms), by contrast, the Kiel Trade Indicator points to positive growth against the backdrop of slightly positive figures for business sentiment from the US.


Output in the goods-producing sector fell again in July compared with the previous month (-0.8%). This is the third decline in a row. Industrial output fell by -1.8%, while construction output increased by +2.6%. The energy sector saw a noticeable increase in July (+2.2%), after some sharp declines since the beginning of the year.

The important automotive and automotive parts sector reported a strong decline of -9.4%, and the significant mechanical engineering sector also reported a drop of -1.6% in July. The pharmaceuticals sector (-1.1%) as well as production of data processing equipment, electrical and optical products (-4.4%) also declined.

After stabilising in the previous month, the particularly energy-intensive industrial sectors recorded a decline of -0.6%. The manufacture of chemical products in particular declined (-1.1%), while the metal production and processing sector recorded growth of +2.0%.
New orders in the manufacturing sector fell sharply in July compared with the previous month (-11.7%), following a strong increase in June (+7.6%). There were significantly fewer orders both from abroad (-12.9%) and from the domestic market (-9.7%). However, the sharp decline in July was primarily due to one-off special factors resulting from large-scale orders in the previous month. Excluding large-scale orders, orders grew by 0.3%.

In particular, data, electrical and optical devices (-23.6%), electrical equipment (-16.7%) and the important mechanical engineering sector (-8.7%) were down significantly. By contrast, the important automotive and automotive parts sector (+2.7%), chemicals (+0.5%) and metal production (+1.0%) recorded slight increases in orders.

This shows that the industrial economy has not yet recovered from its weakness at the beginning of the third quarter. Overall, demand in industry continues to fluctuate strongly month-on-month due to large-scale orders. The more meaningful two-month comparison shows that orders in the manufacturing sector developed positively in July (+4.4%). However, in view of the gloomy business climate and the weak global economy, this does not yet indicate a sustained recovery of the industrial economy. In view of the much poorer business and export expectations of companies and the overall weak development in new orders, there is no sign yet of a noticeable recovery in industrial production.


Price-adjusted retail sales excluding motor vehicles fell by -0.8% in July compared with the previous month, after having already declined slightly by -0.2% in June. The three-month comparison shows growth of 1.8%. Compared with the same month a year ago, the retail sector experienced a real sales decline of -2.2%, which is especially due to the high price increases.

Trade in foodstuffs recorded a real sales increase of +2.0% month-on-month in July, and a decline of -1.7% year-on-year. This segment of the retail sector has recorded year-on-year sales declines for 25 months in succession, mainly due to the sharp rise in food prices. Food continues to be a strong driver of consumer prices, even though food price inflation has continued to slow until recently compared to the same month a year ago (August: +9.0%, July: +11.0%, June: +13.7%). Online and mail-order trade increased by +7.1% in July (compared with -2.1% in the same month of the previous year). The number of new registrations of passenger cars by private owners increased by +8.1% in July. This was the third increase in a row (June: +0.7%, May: +6.1%).
Leading indicators of consumer sentiment are giving very cautious outlooks. According to the GfK forecast, consumer mood dimmed again somewhat in September after recovering slightly in August. It is stagnating at a low level with slight monthly fluctuations, mainly due to gloomier income expectations and consumer restraint. The ifo retail business climate deteriorated for the fourth time in August and remains deeply negative, although business expectations improved somewhat in August from a low level. Overall, the most recent leading indicators point to an initially subdued development in consumer spending.


The inflation rate, i.e. the rise in the consumer price level within the space of a year, was +6.1% in August. The downward trend thus continued (July: +6.2%). The core rate (excluding energy and food) remained unchanged at 5.5%. Food prices again rose at a disproportionately high rate (+9.0%), although inflation also continued to ease (July: +11.0%). At +8.3%, energy prices again rose more strongly than the overall index and the three previous months (July: +5.7%,). This was also due to a base effect resulting from the abolition of the EEG surcharge from 1 July 2022.
Price pressure from energy sources has recently increased again. On the spot markets, prices for natural gas have been rising again since mid-July. Currently, however, the TTF Base Load of €35/MWh is still 84% below the September 2022 level and 7% below the August 2023 level. Nevertheless, market expectations suggest that natural gas prices could rise again to around €50/MWh by the turn of the year.

The current development indicates that the upstream stages of the economy are seeing less price pressure. Producer prices in July 2023 fell significantly, and were down by -6.0% from July 2022 (June: +0.1%,). Compared with the previous month, producer prices decreased (-1.1%). Import prices fell sharply by -13.2% year-on-year in July (-0.6% month-on-month). Wholesale selling prices also slipped in July, both on a month-on-month (-1.1%) and year-on-year (-2.6%) basis. Compared with the same month a year earlier, import and producer prices thus declined at a rate not seen for a long time (producer prices: Oct. 2009; import prices: Jan. 1987). As is expected by companies, the upward pressure on prices is likely to remain high in the coming months, but will gradually slow down. The price pressure resulting from past cost increases and supply chain disruptions has largely been passed on. Energy prices are at a moderate level. Monetary tightening is having a dampening effect on the demand side. Whereas the one-off special factors (9-euro public transport ticket and the tax cut for motor fuel) that increased demand in the previous year, will no longer apply in September, there will be increasing base effects in the period from October 2023 to March 2024 as a result of the temporary reduction in the VAT rate on gas and district heating. Against this backdrop, the current forecast range of economic research institutes for the inflation rate is 6.0% to 6.1% in 2023 and 2.1% to 3.0% in 2024.


The cyclical weakness of the economy is also increasingly affecting the labour market. Registered unemployment increased significantly by 18,000 in August in seasonally adjusted terms. Among the reasons for this sharp increase is the fact that, after graduating, school leavers and training graduates often initially register as unemployed, as well as the fact that many refugees are initially unemployed after completing integration courses.

Employment increased by 15,000 in July compared with the previous month, after remaining roughly stable in June. Employment subject to social security contributions also remained roughly unchanged in June (±0 persons, seasonally adjusted). Short-time work increased slightly in June; however, short-time work notifications for August decreased significantly. The sluggish development of the leading indicators from the Institute for Labour Market Research (IAB) and ifo in August continue to point to slowing momentum in the labour market. While companies are planning fewer new hires, the number of reported vacancies dropped and the employment component of the IAB barometer slipped below its long-term average. Overall, however, the labour market remains largely stable despite the current economic weakness because companies are retaining their skilled workers.


1The report is based on data that were available as of 12 September 2023. Unless stated otherwise, these are rates of change against the respective preceding period on the basis of price-adjusted figures which have also been adjusted for calendar-day and seasonal variations.