Wednesday, April 30, 2008
Retailers blamed a combination of bad weather, the timing of Easter, poor consumer confidence, squeezed household budgets due to rising food and energy prices for the steep drop in sales at the start of the second quarter. In Italy, ongoing political uncertainty was an additional factor cited by retailers.
German sales fell sharply, with the rate of decline similar to the three-and-a-half year record seen at the turn of the year. The index dropped from 51.5 to 44.6, representing a marked turnaround from the growth seen in February and March.
The combination of rising non-staff costs and weak sales caused employment in the Eurozone retail sector to fall marginally in April, following marginal gains in the first three months of the year (the index fell from 50.1 to 49.5). A slight rise in French retail employment was countered by a small decline in Germany and a larger fall in Italy, where the rate of job losses in the past two months has been higher than at any time since late 2004.
Joblessness has now dropped every month since January 2006. The Economy Ministry expects unadjusted unemployment to shrink to 3.27 million this year from 3.77 million in 2007. Employment rose 55,000 this month to 39.92 million, the Labor Agency said. The adjusted unemployment rate was at 7.9 percent in April and the ILO equivalent rate was a 7.3% in March (this data is published with a one month delay).
Thursday, April 24, 2008
The Munich-based Ifo institute said its business climate index, which is based on a survey of 7,000 executives, fell to 102.4 from 104.8 in March. That's its lowest level since January 2006.
The sub component measuring German executives' assessment of the current business situation declined to 108.4 in April from 111.5 in March, while the indicator measuring expectations for future business dropped to 96.8 from 98.4.
Confidence also fell in France, with sentiment the among the 4,000 manufacturers surveyed by Insee, the Paris-based national statistics office, sliding to a 16-month low of 106 from 108.
In Italy, consumer confidence also held near its lowest level in four years, the Rome-based Isae Institute said today, while in Belgium, business sentiment dropped to the lowest level in more than two years in April.
A sharp slowdown in Europe will damp inflation and force the European Central Bank to cut interest rates within six months, the IMF's European Director, Michael Deppler, said earlier this week.
The ECB is reluctant to follow the U.S. Federal Reserve in cutting borrowing costs to bolster the economy, stressing its concern that inflation may get out of hand.
Food-price inflation in Europe accelerated to 6.2 percent in March from 5.8 percent in the previous month. That's the highest since the European Union's statistics office, Eurostat, began the current data series in 1997. The prices for rice, soybeans, wheat and corn have all risen to records this year. Crude oil also reached a record of $119.90 a barrel on April 22.
At the same time ECB policy makers including Germany's Axel Weber and Juergen Stark have suggested the ECB's current benchmark rate of 4 percent may not be high enough to combat inflation.
PMI Flash Estimates
The April preliminary estimate for the German purchasing managers index for manufacturing came in at 53.6 on Wednesday, significantly below economists' expectations of a 54.8 reading.
On the other hand, the services figure surprised on the upside with a figure of 54.6. The consensus had called for a reading of 51.6.
In March, the manufacturing and service PMIs came in at 51.8 and 55.1 respectively.
The euro zone composite PMI was recorded at 51.9, up from both the previous month’s reading of 51.8 and the expected reading of 51.5, but the eurozone manufacturing sector index, which brings together a number of indicators, dropped sharply, from 52 in March to 50.8.
According to a Danske Bank research note, the most conspicuous part of the euro zone PMI manufacturing results was the fall in the new orders index from 50.9 to 48.6, its lowest level in nearly three years.
Manufacturing new export orders contracted this month for the first time in almost three years, according to purchasing managers’ indices for the 15-country region. Even Germany, where overseas sales have appeared resilient, saw a sharp slowdown in growth rates.
“The effects of the euro are becoming increasingly widespread as long-term supply contracts are renegotiated,” said Chris Williamson at NTC Economics, which releases the figures with the Royal Bank of Scotland. So far, eurozone businesses, especially in Germany, have largely shrugged off the euro’s rise.
The results will worry policymakers because the effects of currency appreciation typically take many months to feed through. This week, the euro rose above $1.60 for the first time since its launch almost 10 years ago – suggesting a further slowdown in exports is in the pipeline.
France’s new export orders were already below 50 in March, but the latest figures for Germany showed a fall from 54 last month to 51.6 in April. The survey in-cludes trade between eurozone countries, but NTC Economics said responses by companies suggested the euro’s value was becoming increasingly an issue.
Germany's economy has performed relatively well in recent months. The economic slowdown is most pronounced in Spain and Italy, with France in between. Germany's overall PMI index rose to 55.0 in April from 53.0 in March. But the French composite PMI dropped to its lowest level since November 2004, dipping to 53.9 in April from 55.9 in March.
With a stubbornly elevated rate of inflation and a weaker rate of growth, the European Central Bank's policy dilemma is worsening, leaving the central bank's rate-setters with little room to maneuver.
The worsening outlook for manufacturing contrasted with bullish euro-zone industrial order inflow reported for February, when bookings rose 0.6% month-on-month and 9.9% year-on-year, according to Eurostat.
Monday, April 21, 2008
However the Ministry also indicate that the economic data they have to hand suggest that growth will moderate in the course of this year. Again we concur, and suggest that the key data to watch moving forward are the rate of export growth and investment in machinery and equipment, once both of these start to fall back the deceleration will become much more pronounced.
"Economic growth forces still prevail,'' the Berlin-based ministry said today in its monthly report, citing ``favorable economic fundamental data, robust domestic demand, above-average capacity utilization as well as optimistic sentiment at companies.'' Still, economic risks such as rising oil prices, the euro's appreciation and a recession in the U.S. have increased, and slowing orders may be a sign of ``brake marks'' caused by less dynamic global growth, the ministry said.
The Ministry report is the second government study in four days to suggest that the German economy, which is still Europe's largest, may be hurt over time by cooling of world trade. The Economy Ministry said on April 18 that economic growth will likely moderate after an acceleration in the first quarter as the outlook for exports darkens "in the short term.''
The Ministry noted that sluggish consumer spending was a "concern" and it is reasonably clear that slowing exports - when this situation arrives - will not be compensated by higher internal demand.
German manufacturing orders unexpectedly fell for a third month in February, the Economy Ministry said April 4. Adjusted for seasonal swings and inflation, orders fell 0.5 percent.
Friday, April 18, 2008
The euro gained after the inflation report, which may reinforce investor expectations that the European Central Bank will keep the benchmark interest rate at a six-year high of 4 percent even as counterparts cut borrowing costs. Evidence that companies are raising prices and wages has raised concern among ECB policy makers about an inflation spiral.
Mineral oil products rose 20.5 percent in the year and 4 percent from February, the statistics office said. Excluding energy costs, producer prices rose 2.8 percent from March 2007.
The price of oil has surged 82 percent in the past year and reached a record $115.54 a barrel yesterday. German inflation was at 3.3 percent in March, above the ECB's limit for a 13th month. The ECB seeks to keep inflation just below 2 percent.
Tuesday, April 15, 2008
The euro dropped more than half a cent to $1.5828 at 11:06 a.m. in Frankfurt following release of the report while the DAX index retreated as much as 25 points to an intra-day low of 6532.76. Germany's benchmark DAX share index has dropped 19 percent this year, the biggest decline among major European stock markets, as investors grow steadily more nervous about the robustness of the German economy to the increasing difficulties which are encircling it - "am I to be the one to keep my head when all those around me are losing theirs?". So while in real data terms growth in Europe's largest economy still seems to be holding up, the outlook is now evidently deteriorating.
In a further indication of the steadily changing conditions the German Credit Reform agency reported on April 1 that aroun a third of medium-sized German companies are already finding it more difficult to get loans. And at the interbank level the cost of borrowing euros for three months rose to 4.75 percent on Monday, the highest level since Dec. 27.
The rate of expansion in German services growth slowed a little in March, as the services purchasing managers index dropping to 51.8 from 52.2 in February. Still German services continue to expand, and this gives us one measure of the extent to which the German economy had up to now shown itself able to resist. The rate of expansion is now much weaker than before August 2007, but there is still expansion.
German industrial production has also proved reasonably robust in recent months and rose one more time in February, giving its third monthly gain in as many months, as manufacturing output continued to hold up and unusually warm temperatures boosted construction. Output rose a seasonally adjusted 0.4 percent from January, when it gained 1.4 percent, the Economy Ministry in Berlin said last week. Year on year total industrial production was up 6.1 percent when adjusted for the number of working days.
Construction output also rose in February - up 3.7 percent on the month. Manufacturing production increased 0.3 percent and output of semi-finished goods rose 1.6 percent. Investment goods production however declined by 0.2 percent month on month.
German retail sales, however, had their biggest month on month fall in almost a year in February as faster inflation eroded consumer spending power. Sales, adjusted for inflation and seasonal swings, fell 1.6 percent from January, according to data from the Federal Statistics Office. That's the biggest drop since May 2007.
According to provisional results of the Federal Statistical Office, in February 2008 turnover in the German retail trade was up in money terms by 2.4% and down in real inflation adjusted terms by 0.3% over February 2007. There was even one extra shopping day in February 2008 (25) as compared with February 2007 (24).
So German consumption is a long way from driving the German economy forward at this point.
Then There Is Inflation
Companies and consumers are also hard at it grappling with higher energy and food prices, which drove Germany's inflation rate to 3.2 percent last month. Crude oil prices have climbed 76 percent over the past year, reaching a record $114.95 today.
So what we have left here are exports, which are reflected in those steady industrial output numbers, and on the plus side German exports in February remained unchanged from January, suggesting that Europe's largest economy continued at that point to resist the force of the global slowdown and the rise in the euro, but adding export on-top-of export may now be getting to be a harder and harder thing to do. Even more to the point, a change in the distribution of German exports is taking place on the margin, since while the pace of expansion to EU countries slowed from 7.7% in January to 6.7% in February, the pace of expansion to non EU countries (and we could think here in particular of Russia perhaps) rose from 11.5% in January to 13.5% in February. So rising demand in Russia (and to a lesser extent China) is making up for declining demand from Spain and Italy as these economies slow. All of this is now a delicate balancing act, and we will need to watch carefully what happens in March and April.
German sales abroad, when adjusted for working days and seasonal changes, were unchanged in February from January, when they rose 3.6 percent. Imports were down a seasonally adjusted 0.4% from January, reflecting the fact that internal demand in Gemany could hardly be called "vibrant" at the present time. Exports rose 9 percent year on year, while imports were up 7%.
What really matters about German exports is their general distribution and comparative rates of growth. The numbers for China were up from 27,520.6 million euro in 2006 to 29,922.7 million euro in 2007, an incease of only 2,402.1 million Euro (or 8.7%) while exports to the Czech Republic went up from 22,255.3 million euro in 2006 to 26,026.6 million euro in 2007, an incease of 3,771.3 million Euro, or 16.8% (proportionatley about double the Chinese increase at). So we can say that the Czech Republic is just about as important a customer for Germany as China is, and more importantly Germany has more vulnerability to economic slowdown in the Czech Republic than it does to one in China.
The United States has been declining in importance for German exports, and is down from 78,011.4 million euro in 2006 to 73,356.0 million euro in 2007, that is a decrease of 4,655.4 million Euro or 6%. Poland on the other hand is way up - from 28,820,4 million euro in 2006 to 36,083.2 million euro in 2007, that is an increase of 7,262.8 million Euro or 25.2%. Hungary is also up - from 15,870.8 million euro in 2006 to 17304.9 mi,llion euro in 2007, that is an increase of 1,434.9 million Euro or 9%.
So another way of looking at this is that Poland, the Czech Republic and Hungary between them are now - at 79,414.7 million euro in 2007 - more for German exports than the United States - with 73,356 million euro in 2007 - is, which I think is really quite incredible.
Spain was up from 42,159.2 million euro in 2006 to 48,157.7 million euro in 2007, an increase of 5,998.5 million Euro or 14.2%, while Italy was up from 59,971.4 million euro in 2006 to 65,148.0 million euro in 2007, an increase of 5,176.6 million Euro or 8.5%. Again Spain and Italy are also between them more important for Germany than the US is, and it is of course these two economies that are now slowing significantly.
The Russian Federation on the other hand continues to expand rapidly, and was up from 23,371.8 million euro in 2006 to 28,185.2 million euro in 2007, an increase of 4,813.4 million Euro or 20.6%.
Now Hungary is a rather interesting case in point here, since it has a fairly open economy with external trade (exports plus imports) now representing 155% of gross domestic product. Hungary is also itself increasingly dependent on exports, since there is a recession in internal demand following the introduction of an austerity programme in the autumn of 2006. And, guess what, Hungarian trade is incredibly interlinked with Germany, and nearly 30% of Hungarian exports now go to Germany.
Also Hungary's industrial output has been doing pretty well over the last couple of months, jumping by 9.8% over February 2007 on a working day adjusted basis. Output also increased reasonably well in January, following rather weaker numbers in November and December, numbers which really rather mirror what was happening in Germany at the time.
If we look at the chart for Polish industrial output, we can again see a surge in February, with industrial output at an annual 14.9 percent rate, up from 10.8 percent in January.
And again the Czech republic looks pretty similar, with industrial output growing by 11.3 percent year-on-year in February, compared to a 9.3 percent rate in January.
Curiously, and I'm not sure at this point whether this is simply a coincidence or not, the central banks in all these three countries have been busy raising base rates in recent months.
On the other hand this recent acceleration is unlikely to be of long duration. We may see the surge continue, but I doubt it will run many more month after that, and I read the ZEW index reading in just this sense. In addition German manufacturing orders declined for the third consecutive month in February. Orders,adjusted for seasonal swings and inflation, fell 0.5 percent from January, when they dropped 0.7 percent, the Economy and Technology Ministry said earlier this month. Export orders were down 1.1 percent in February from January while domestic orders were unchanged.. In the first two months of the year, orders fell 1.5 percent from the previous two-month period.
Also if we come to look at Hungarian order books we will find a rather similar picture in that total new orders for industry were down 5.3% year on year in February as compared with a decline of only 2.5% in January . In particular new exports orders fell by 4.2% year on year (which compares with a 0.8% year on year gain in January). Eszter Gárgyán, from Citibank, Budapest - quoted in Portfolio Hungary - is pretty much to the point on all of this:
“The latest Euro Area economic indicators were surprisingly strong, suggesting that Hungary's main export partner (Germany) is so far in good shape and that the effects of the US slow down and rising credit costs are limited. We expect a broader Euro Area weakness in the second half of the year, which is likely to limit the Hungarian growth recovery due to weaker net exports."And as Hungary goes, so goes Germany - or vice versa if you prefer, since the level of circular causality running through German growth and growth in the East European economies we have been looking at is now very strong indeed.
Where Do We Go From Here?
My personal feeling is that the German economy data now needs watching very carefully indeed. The weakness is evident, despite the valiant effort we have seen to hang on in there. The slowdown in Italy and Spain will undoubtedly take a toll on exports, and possibly the UK will act as a drag too. I don't think it needs too much change in export growth on the margin to start to tip this all over, since export driven economies are often not the most stable of beasts.
The next key data point will be the manufacturing purchasing managers index reading for April which is due out at the start of May. This should tell us a lot about what is happening NOW, as opposed to what was happening two or three months ago. In the world of macroeconomics these days a month, and even a week, is often a long time.
The International Monetary Fund last week cut its prediction for German economic growth this year to 1.4 percent from 1.6 percent, and recommended the European Central Bank start cutting interest rates. This view has so far been frowned on in Berlin and over at the ECB German, with most notably German Finance Minister Peer Steinbrueck saying he sees no need to "correct our growth expectation'" for 2008 of 1.7 percent, and Bundesbank President and ECB council member Axel Weber informing the press that "I don't share the International Monetary Fund's pessimistic view.''
Far from the IMF being "pessimistic" I think there are strong downside risks to the IMF forecast, and especially if problems start to emerge in those Eastern European economies on which Germany is now, as we have seen, very dependent for export growth.
Wednesday, April 9, 2008
German sales abroad, when adjusted for working days and seasonal changes, were unchanged from January, when they rose 3.6 percent, the Federal Statistics Office in Wiesbaden said today. Imports were down a seasonally adjusted 0.4% from January, reflecting the fact that internal demand in Gemany could hardly be called "vibrant" at the present time. Exports rose 9 percent year on year, while imports were up 7%.
Germany exported goods to the value of EUR 84.6 billion and imported goods to the value of EUR 67.7 billion in February 2008. The foreign trade balance was in surplus by EUR 16.9 billion. In February 2007, the surplus was EUR 14.3 billion.
According to provisional results from the Deutsche Bundesbank, the German current account showed a surplus of EUR 15.4 billion in February 2008, which included the balance of services (EUR –0.0 billion), factor income (net) (EUR +4.2 billion), current transfers (EUR –5.0 billion) and supplementary trade items (EUR –0.6 billion). In February 2007, the German current account showed a surplus of EUR 11.4 billion.
In February 2008, Germany sold goods to the value of EUR 54.7 billion to the Member States of the European Union, while it received goods to the value of EUR 44.1 billion from those countries. Compared with February 2007, dispatches to and arrivals from the EU countries increased by 6.7% and 9.1%, respectively. Goods to the value of EUR 36.3 billion (+5.6%) were dispatched to the euro area countries in February 2008, while the value of goods received from those countries was EUR 30.7 billion (+8.6%). Goods to the value of EUR 18.3 billion (+9.1%) were dispatched to EU countries not belonging to the euro area in February 2008, while the value of the goods which arrived from those countries was EUR 13.4 billion (+10.2%).
Germany exported goods to the value of EUR 30.0 billion to and imported goods to the value of EUR 23.6 billion from countries outside the European Union (third countries) in February 2008. Compared with February 2007, exports to third countries were up by 13.5% and imports from those countries by 3.3%.
Monday, April 7, 2008
Construction output rose 3.7 percent in February from the previous month, today's report showed. Manufacturing production increased 0.3 percent and output of semi-finished goods rose 1.6 percent. Investment goods production declined 0.2 percent. January's gain in output was revised down from 1.8 percent. Relatively mild weather has allowed construction companies to work during much of the winter. At 3.6 degrees Celsius the average temperature in February was 3.3 degrees higher than the long-term average, according to the Offenbach-based German weather service DWD.
In a two-month comparison, which smoothes out monthly volatility, industrial production increased 2.4 percent in January and February from the previous two-month period.
German industry still seems to be working off the huge batch of orders which built up during the fourth quarter, but more than likely we'll see a slowdown over the coming months as global demand is cooling an the euro remains strong. As a possible early warning of this factory orders fell 0.5 percent in February, a government report showed last week, while the International Monetary Fund has cut its 2008 outlook for economic growth in Germany to 1.4 percent from 1.5 percent.
Thursday, April 3, 2008
In Germany, Europe's largest economy, services growth slowed, with the index dropping to 51.8 from 52.2 in February. Still German services continue to expand, and this gives us yet another measure of the extent to which the German economy - for the time being - continues to resist.
As for the details, new business grew more slowly, as did net hiring. Tim Moore, an economist at NTC, said that on average, figures for the first quarter pointed to the weakest growth in the German service sector in four and a half years.
"With activity growth slowing, and backlogs of work falling for a fourth month running, job creation came under pressure in March and was the weakest since October 2006," he said.
Business expectations among German service firms dipped to their lowest level in four months, registering a level of 50.3, as the mood among financial intermediaries hit a record low.
"There were divergent trends across the service economy, with new work rising at a solid pace at firms operating in renting and business activities, but contracting markedly in the financial intermediation sector," NTC said.
The most optimistic companies were those operating in the hospitality, transport and storage sectors.
The European Commission has also now reported its eurozone “economic sentiment” indicator for March, with the composite number bouncing back a little from the February reading which its lowest level since December 2005. The indicator, which gauges optimism across all economic sectors and is regarded as a good guide to likely future trends, was back up to 102 after falling to 100.1 in February from 101.7 in January. As we can see in some of the counries shown in the chart below, the picture is a mixed one, with Germany for the time being holding reasonably stable, climbing back to 104 from 103.7 in February (France is also holding up fairly well at 105.6, from 105.2 in February), Ireland hovering, Italy continuing its steady downward path, and Spain continuing to head steadily off the map. The March reading in Spain was 83.9 which was down from 87.5 in February. I suppose here it is a case of how low can you go before you hit bottom. Yet awhile I suspect.
Tuesday, April 1, 2008
According to provisional results of the Federal Statistical Office, in February 2008turnover in the German retail trade was in money terms 2.4% larger and in real inflation adjusted terms 0.3% smaller than in February 2007. There was even one extra shopping day in February 2008 - 25 - as compared with February 2007 - 24.
When adjusted for calendar and seasonal variations, February retailturn over was in nominal terms 0.7% and in real terms 1.6% smaller than that achieved in January.
Taking the last two months together and comparing with January-February 2007 retail turnover was up in nominal terms by 2.4% and exactly equal in inflation adjusted real terms to the turnover achieved in the first two months of 2007. If we look at the chart for the seasonally adjusted monthly index we can see that the general trend since March/April of 2007 has been steadily downwards, which is just another way of saying that the German economy is now almost completely dependent on exports (and the capital investment necessary to be able to produce them) for obtaining economic growth. So it seems a little hopeless to imagine that at this point a recovery in domestic consumer demand is going to sustain the economy should exports start to flag.
German policy makers who may have been relying on consumers to help fuel growth as a U.S.-led global economic slowdown may ultimately threaten exports, will find these results very disappointing. While consumer and business confidence all rose last month and as falling unemployment should in theory help support consumption, inflation running close to the fastest pace in 12 years is surely starting to impact on consumer spending power.
German consumer prices, as measured by the harmonized European Union method, rose 3.2 percent in March. European inflation hit 3.5 percent in March, the highest level in almost 16 years, the European Union's statistics office in Luxembourg said yesterday.
If we look at the PMI chart (the PMI gives us a slightly different, and more "as it happens", reading on retail sales, we should note that even though retail sales have been hardly spectacular in the first three months of this year, they are also hardly collapsing, and the March reading suggests they will hold up at least one more month. This reading is consistent with a lot of other data we are getting at the moment, and does suggest that even though consumption will not drive growth, at least it mirrors the underlying "push" which is still being sustained in the exports and the industrial production areas.
Sales of food, drink and tobacco fell 4.1 percent from a year earlier, sales at supermarkets and department stores declined 4 percent and specialty food-store sales declined 5.9 percent. In February, non-food retail sales gained 2.8 percent from a year earlier, with the biggest increase -- 7.4 percent -- in sales of clothes, shoes, textiles and leather goods in specialty stores. Sales of appliances and furniture rose 2.8 percent, the statistics office said.
GfK AG, the Nuremberg-based consumer research company, said March 27 that if inflation doesn't abate, German consumer-spending growth may fall short of its 1.5 percent forecast.
``Should the inflation rate remain significantly above 2 percent this year and therefore stay higher than initially assumed, then private consumption will only increase by up to 1 percent this year,''
Even so, GFKs consumer confidence index rose for the first time in three months in April as continuing employemnt growth appeared to havve boosted households' willingness to spend. Germans' income expectations and a gauge measuring their optimism about the economic outlook rose, according to the index.
The March jobless rate fell to 7.8 percent, the lowest level since August 1992, the Federal Labor Agency said today.
The adjusted number of people without work fell by 55,000 to 3.29 million, the labor agency said. In western Germany, the number of people out of work declined by a seasonally adjusted 36,000 to 2.15 million in March, while the number in eastern Germany dropped by 19,000 to 1.14 million. According to the latest comparable data from the Organization for Economic Cooperation and Development, Germany's jobless rate was 7.6 percent in January, compared with 7.8 percent in France, 3.8 percent in Japan and 4.9 percent in the U.S. The OECD average that month was 5.5 percent.
Today's report adds to a number of other signs which we have been noting on this blog that the German economy is currently resisting the slowdown in global growth, a record oil price and the euro rising to a high against the dollar. One very large part of the explanation may well be the rapid rate of expansion which still continues in many East European economies and Russia, which are very very important to German export performance.
Consumer confidence climbed for the first time in three months in April, business confidence unexpectedly rose for a third month in March and export growth accelerated more than expected in January, figures published last month showed.
German unemployment has now fallen for 26 months in a row. German plant and machinery orders rose 10 percent in February from a year earlier, driven by domestic sales, which jumped 12 percent, the VDMA machine makers association said in a statement today. Foreign sales gained 9 percent.
The March reading surpassed an NTC/BME "flash estimate" issued on March 20, which saw the index at 54.9.
An index on employment rose to 56.5 from 55.3 in February, hitting its highest level since the survey began in April 1996. German unemployment hit a post-war high above 5 million in March 2005 but has since fallen steadily, helped by solid economic growth and hiring by companies to meet firm demand. Joblessness fell for the 23rd straight month in February.
An NTC index on new orders accelerated to 54.9 from 52.8 in February. Another on output eased to 54.7 from 56.0 but remained well above the 50 threshold between expansion and contraction. The strong PMI reading fits in well with the recent reports from the Ifo and ZEW economic institutes showing German corporate morale rose in March, suggesting the economy is proving resistant in the short term to problems in the United States.