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Saturday 29th of January 2011
June 27, 2006    

Ifo index shows German business confidence up

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by Elaine Frei

The Ifo institute’s newly released business climate index shows that business sentiment in Germany is higher than it has been in 15 years. The index rose to 106.8 in June, up from a reading of 105.7 in May. In addition, separate confidence surveys looking at Italian and Dutch sentiment show increases in those nations as well. Business sentiment in France, however, was down in a survey released earlier this week.

The new measures of confidence in the Eurozone have lead some analysts to speculate that the European Central Bank might step up its increases in interest rates in the region. However, despite comments from some ECB officials that support this outlook, there have been no comments from the president of the ECB that would contradict his earlier remarks that indicated there would be no more rate hikes until the ECB meets at the end of August.

There was some speculation that the German confidence numbers might have been helped by the nation’s success so far in World Cup competition as well as by positive comments about the organization of the tournament, being held in Germany. In addition, some analysts have been hesitant to put too much importance on the Ifo survey in light of the reality that most of Germany’s economic growth has come on industrial exports, with continued weakness in German consumer spending. Standard & Poor’s warned that increasing interest rates could hit German consumers especially hard considering their relatively high debt load compared to consumers in other parts of the Eurozone.

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