Signs of Stability out of Europe with German PPI Release
- German Producers Price Index rises
- Good sign for German economy
- German figures represent picture of EU health
Early on Monday, the Germans released the PPI figures month-over-month, which is the Producers Price Index. This measures the cost of goods flowing out of production, which is a sign of German exports strength.
Germany’s economy is highly levered to the export market, so that is something traders should be paying attention to. Furthermore, as Germany goes, so goes the European Union.
The announcement
The Producers Price Index came out at 0.1% month-over-month, which was much better than the 0% expected. While this isn’t necessarily a barnburner of a number, the reality is that it is the latest in a string of European numbers that are at least showing signs of stability. With that in mind, it should continue to elevate the prospects for the European Union.
This is something worth noting as the German numbers are starting to turn slightly upward, and that will continue to further emphasize the notion of the EU recovering. It may well be another reason to think that the EU is starting to look a little bit more attractive, as has been seen recently in the currency markets.
It’s not quite time to celebrate yet, but it certainly looks as if the EU is starting to turn the corner in general.
Keep an eye on Germany
Going forward, it’s very likely that the market will continue to pay attention to other economic indicators coming out of the EU. It is worth remembering, though, that as far as the EU is concerned, Germany is by far the most important place to look. In fact, the Bundesbank has recently suggested that they see German GDP at 0.6% in 2020. With that in mind, it’s very likely that the European Union and its assets will continue to try to turn themselves around.
As the markets have been very noisy in general, a certain amount of money management will come into play in order to protect accounts. The longer-term investor looking to take advantage of the swing higher will probably be better served in taking little bits and pieces along the way, building up a core position that will explode in value as the EU corrects itself and finally moves forward.
Recently, however, it should be noted that the European Union is still lagging behind Asia and North America.