State of the German and Chinese economies


We’ve already stated that U.S. economic growth is very solid right now. Most of the important U.S. indicators (industrial production, consumer spending, housing) are showing signs of healthy growth with no signs of slowing down.
What about Germany (i.e. Europe) and China? Let’s take a look.

Germany

Germany is Europe’s main economic engine, and Germany’s economy relies heavily on manufacturing/exports.
Year-over-year GDP growth rate
Germany’s yoy GDP growth rate continues to trend higher after bottoming in late 2015.

Germany yoy inflation rate
Germany’s inflation rate has fallen a little bit for most of 2017 after rising significantly in 2016. This is similar to the U.S. inflation rate.

German export prices
German export prices have plateaued in 2017.

German yoy change in producer prices
Producer price growth has been stagnant for 2017 after rising significantly in 2016. This is very similar to Germany’s yoy inflation rate.

German business confidence
The Ifo index for business climate continues to soar. This is a good leading indicator for the German economy and demonstrates that the German economy has not deteriorated in a meaningful way (yet).

German manufacturing PMI
Like the Ifo Business Climate Index, Germany’s manufacturing PMI continues to soar. Businesses like German manufacturers are confident about future growth.

German yoy change in Industrial Production
YoY growth in Industrial Production has plateaued since mid-2017.

German stock market

Here’s DAX, the German stock index. It has soared since early 2016, which is when the German and European economies bottomed.

Chinese economy

Emerging markets have soared in 2016-present because the Chinese economy bottomed in early-2016. How’s the Chinese economy doing today?
China’s yoy GDP growth rate
After rising in 2016, China’s GDP growth rate has plateaued and fallen a little bit.

Chinese producer prices
After soaring in 2016, Chinese producer price growth has flattened in 2017.

NBS Manufacturing PMI
The manufacturing PMI continues to trend higher despite flattening producer price growth.

New Orders
Like the manufacturing PMI, the China New Orders Index continues to trend higher.

China consumer confidence
Chinese consumer confidence is literally going through the roof right now.

China’s stock market

Here’s the Shanghai Composite. After soaring and crashing in 2015, the Shanghai Composite has slowly grinded higher.

Bottomline

The German and Chinese economies recovered rapidly in 2016. They are still growing in 2017, but growth is more mixed. Some key indicators have plateaued while others continue to rise. (None of the key indicators have deteriorated markedly yet).
This is in contrast with the U.S. economy, which is growing at a beaaaauuutiful rate (to use The Donald’s favorite word).

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