Commerzbank's Early Bird indicator remained in negative territory in November, though it rose slightly from October, signaling that there is no sign of the recession coming to an early end, analyst Ralph Solveen said in a note Monday. The Early Bird indicator stood at minus 0.9 in November, up from minus 1.2 in October.
Rate cuts by the European Central Bank are having some effect on the German economy, the largest in the Eurozone, Solveen said. The analyst said euro's continued retreat is undoubtedly also good for the economy.
Solveen noted that everything points to the German economy only making any real recovery in 2010 at the earliest. Commerzbank's Early Bird indicator should be pointing more and more in this direction over the coming months. The additional ECB rate cuts expected will mean a steady improvement in the 'normal' monetary environment, sending the indicator up towards zero, the analyst said.
That said, Solveen pointed out that it takes four quarters even in normal times for rate cuts to have a positive impact on the economy. "And in view of the financial-market crisis, it is more likely that they will take longer this time round to trickle through".
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