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People really freaked out last Friday when it was reported that German factory orders plunged 4.8% in November, which was much worse than the 1.8% decline expected. This is concerning since Germany, the largest economy in Europe, is also considered to be in the best economic shape in the eurozone.Surely, a turn in the German economy would send Europe into recession, or perhaps a deeper recession than it is already in.
However, Jim O’Neill, Chairman of Goldman Sachs Asset Management, thinks these fears may be a bit overblown. From his latest note:
Indeed, quite a lot of the German data continues to positively surprise. While their highly volatile factory orders fell sharply in November, the December data to date has been better, including both auto sales and unemployment and, inline with the earlier reported better-than-expected December IFO, the latest German PMI positively surprised.