The new fear of the “double dip”

Less consumption, less investment: the record increase in corona infections does not bode well for the economy. But there are also signs of confidence.

Unsettled consumers: Corona depresses the buying mood.

Dhe standstill is forgotten, in many factory halls there is brisk activity again – economic indicators published on Friday suggest that the rise in corona infections has left German industry cold so far. It is even still on the upswing, report the economists at the London Markit Institute based on their monthly survey of 1,000 purchasing managers. Industrial production grew at the highest rate since February 2011.

The Markit barometer for industry rose from 62.4 points in September to 64.9 points. The Corona low of April has now been forgotten, when the index at 34.5 points was a long way from the 50-point mark that could be expected to generate economic growth. Markit economist Phil Smith states that more and more industrial companies are approaching the pre-pandemic level of growth. Despite the second wave of corona infections, the German economy is holding up “pretty well”.

For other parts of the economy, however, the picture is different, especially for service providers. Your mood has clouded over in view of the worsening Corona situation. The Markit barometer for business activity in the service sector fell from 50.6 to 48.9 points from September to October – and thus for the first time since spring below the growth threshold of 50 points. In the euro area, the situation is a little worse.

Talks with the SPD are ongoing

And other indicators also suggest that the ever-increasing number of new infections and the associated warnings from politics are leaving clear traces in economic activity. Consumers seem unsettled. They are apparently more reluctant to go shopping beyond their daily needs.

The consumer climate index of the Nuremberg market research institute GfK, which is based on the monthly survey of 2000 consumers, remained around 2 points in the red in October. That is much better than the minus 23 points from the spring, but also a long way from the pre-crisis level of plus 10 points. The recovery from the summer has come to a standstill, the market researchers announced on Thursday that more savings will be made again. Income expectations have fallen significantly.

That doesn’t bode well for companies. As a precaution, Federal Minister of Economics Peter Altmaier (CDU) announced further aid on Thursday. The bridging aid for the self-employed and medium-sized companies should be extended until mid-2021, he said after a video conference with 35 business associations. The grant program, which reimburses companies for part of their fixed costs, is currently running until the end of December.

It was already known that it should continue in January – just not whether three or six months. He wanted “planning security”, so Altmaier. On Friday he reaffirmed his plans on the sidelines of a tourism forum. “We are determined to expand and increase our aid efforts within the framework of what the EU Commission enables us,” promised Altmaier. Several associations from particularly affected economic sectors have announced a demonstration in Berlin for next Wednesday.