German business confidence surges in January
The Munich-based Ifo think tank today announced that confidence among German firms has risen to its highest level in 18 months.
The Business Climate Index rose for the tenth consecutive month from 94.6 in December to 95.8 in January – exceeding analysts expectations.
In the meantime, business expectations, which form part of the index, increased to 100.6 from 98.9 – the highest reading since July 2007.
Heinrich Bayer at Postbank said the figures were a “positive surprise”.
“There was a strong rise in expectations. It really is an ideal result, to have both index components rising further and expectations being significantly above expectations. It points to significant growth potential for the economy,” he said.
Ifo surveys 7,000 business executives from the manufacturing, construction, wholesaling and retailing sectors.
However, the index comes just a day after the GfK market research group announced that consumer confidence in Germany is waning after the group’s climate index stood at 3.2 points in February, falling from a revised 3.4 in January.
The forward-looking consumer confidence indicator, which is based on a survey of 2,000 Germans, is being hit by the fear of rising unemployment which is putting incomes under pressure.
This is partly due to the Government’s “Kurzarbeit” scheme, which was introduced to prevent mass redundancies which has seen hundreds of thousands of Germans moved to part-time work.
Germany, which is Europe’s largest economy, contracted by a record 5% in 2009 – the first time in six years the economy had shrunk and the deepest since World War II.
The record contraction was due to a slump in demand in exports and investment. In 2009, exports plunged by 14.7% on the year, while investment in equipment fell by one fifth.
The fall in exports also led to Germany losing its status as the world’s largest exporter as China overtook it in this field.
However, Germany was one of the first major economies to exit recession after experiencing positive growth in the second quarter of 2009.
The economy expanded by 0.7% quarter-on-quarter in the third quarter of 2009 and by 0.4%.
The German Government is predicting growth of 1.2% in 2010 and economists are cautiously optimistic about Germany’s growth prospects.
Visited 1668 times, 2 so far today
Comments (0)
Trackback URL | Comments RSS Feed
There are no comments yet. Why not be the first to speak your mind.