German business confidence hit by cold weather
The Munich-based Ifo think tank today announced confidence among German firms has unexpectedly fallen for the first time in 10 months.
The Business Climate Index fell from 95.8 in January to 95.2 in February – analysts had expected a rise.
The euro dipped after the news but according to Hans-Werner Sinn, the Ifo’s president, business sentiment will rise again as the weather picks up. Germany experienced its coldest January since 1987, which slowed construction and consumption.
“For the first time in ten months, the business climate index has not risen.” he said.
“The economic recovery is expected to continue when winter is over,” added Mr Werner Sinn.
Germany, which is Europe’s largest economy, contracted by a record 5% in 2009 – the first time in six years the economy had contracted 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.