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German factory orders slumped the most in a decade in February, confirming that the manufacturing sector is facing a full blown recession. Consequently, economic growth revisions continue to be negatively oriented and the largest European country is now expected to grow at its slowest pace since 2013, below 1%. Thus, the much-awaited macro-economic stabilisation in Europe is yet to materialise, so far. 

Nevertheless, there are some pockets of hope. Both the IFO and ZEW publications, two leading indicators, are pointing to a welcome improvement. On top of this positive development, some relief might also come from China. The Chinese authorities have endorsed different policy stimuli to ensure that target GDP growth will be reached this year and a positive impact will start to kick in, as evidenced by the latest business conditions survey. The relationship between the two countries is strong (c.f. exhibit 1) as China is one of the biggest export markets for Germany. In the US, the last labor report showed a solid recovery in job creation to 196k, up from 33k in February, confirming that the US economy is still resilient despite the recent world economic strains.