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Strong German Recovery Expected But US Factories Slow Down

As the global recovery from the Covid-19 pandemic and lockdown gathers pace, it is becoming clear that the rate of recovery is going to vary widely from one country to another. A look at a few examples from around the planet helps to prove how this may work.

The German Outlook

The German central bank, the Bundesbank, has revealed that they expect to see a fast recovery that covers a broad section of the economy in 2020. This prediction comes after a disappointing second quarter of the year in which the German GDP dropped by 10.5%.

However, the Bundesbank analysts believe that the return to normality in the country will allow businesses to re-open and spending consumption to rise again. This follows on from the low point in April, with gradual improvement in the economy since then.

They point to the fact that the summer quarter of 2020 should show the economy starting to “grow very strongly”. However, they also stated that the introduction of a coronavirus vaccine is vital for the overall global economy.

The American Factory Slowdown

In the US, there has been a slowing of the factory recovery in August. This was revealed in the Empire State manufacturing index, where we can see how factories in New York have been performing. As with the UK, manufacturing has been badly hit and lately there has been a rise in collection agency use.

This closely-watched index showed a fall from 17.7 in July to just 3.7 in August. These numbers reflect the fact that there was an initial surge in activity last month, as many companies got back to work after a period of inactivity, but that this has been reduced in August.

Their new orders index fell from July to August, dropping by 15.6 points to -1.7. Another area to witness a decline is shipments, where a fall of 11.8 points brought it down to 6.7. All of these figures suggest that the initial surge to catch up with back orders has now ended.

British Supermarkets Sales Dropped

In the UK, the area of most concern is the jobs market, with many more people expected to be made unemployed as the furlough scheme comes to an end later this year. Another piece of recent news showed that supermarket sales across the country have slowed down following a boom period.

This slowdown coincided with the introduction of the face-covering rule. In fact, some 2 million fewer visits were made to the nation’s supermarkets after this regulation came into force.

In the three months to 9 August, the amount of grocery sales fell by 14.4%, on a year-on-year basis. However, it seems that this was a temporary drop when the face-covering became effective, with sales figures now starting to bounce back.

It is reported that people are now putting more planning into their shopping trips, but Brits still spent £9.7 billion on groceries in the four week period up to 9 August. This was higher than the usual pre-Covid levels, but also the lowest monthly amount spent since February.