Aline Schuiling, the senior economist at ABN AMRO, notes that Germany’s ZEW indicator for economic expectations jumped higher in November as it rose to -2.1, up from -22.8 in November.

• “The jump in the indicator probably reflects that worries about the outlook for Germany’s exports and industry have eased. Indeed, the details of the ZEW report show that the participants to the survey have significantly raised their expectations about the economic situation in the US, Japan and the eurozone.
• The ZEW expectations indicators tends to track changes in Germany’s economic growth relatively well. At November’s level of -2.1, it still is below its long-term average value of 21, and the current level would be consistent with GDP roughly stabilising. This would be in line with our scenario for the German economy. On 14 November, the first estimate for Q3 GDP growth will be published.
• Our (and the consensus) forecast is that GDP contracted by 0.1% qoq during that quarter, which would be the second consecutive quarter of contraction (Q2 was -0.1% qoq as well). This would put Germany in a technical recession.
• Still, we expect this recession to be neither deep nor long as private consumption, government spending and construction output are expected to expand in the coming quarters, while the negative impact of exports and manufacturing output is expected to diminish. Indeed, we have pencilled in stabilisation in Q4 and modest growth in the first half of 2020.”