Business confidence in Germany continues improvement
A closely watched survey of business executives conducted by Germany's Ifo Institute has provided a further sign that confidence in the German economy is improving.
The Munich-based think-tank said that its measure, which shows sentiment among 9,000 companies which are surveyed monthly, increased to 95 in November from 94.7 in October. Not only does the data show the third consecutive monthly improvement since September, it heralds a turnaround from an almost uninterrupted decline over the last two years.
“The index has not fallen in three months, which suggests that the economic weakness is bottoming out,” said Jack Allen-Reynolds, senior European economist at Capital Economics.
The Ifo's forward-looking indicator for business expectations also showed a rise in November to 92.1 - up from 91.6 in October.
Economists are, however, remaining cautious on the signs of improvement.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics told the Financial Times: “At this rate, the Ifo points to stabilisation in economic growth close to zero, rather than an upturn, at best.”
Pessimism remains among manufacturers about the situation with a net balance between those reporting good or poor business climate at -5.9, a drop from October's -5.3, though still up from September's -6.4 - a decade long nadir.
“The details show that manufacturing sentiment worsened somewhat, reversing the rebound last month, while services confidence increased,” said Mr Vistesen.
The services and construction sectors continue to report positive conditions with a net balance of 17.3 and 20.4 respectively.
The PMI Index for German manufacturing has also shown a marginal improvement for the second consecutive month last week. And earlier this month, Germany reported better than expected trade growth and industrial orders.
“The latest Ifo index adds to latest signs of a bottoming out of the German economy. However, bottoming out still does not mean a rebound,” Carsten Brzeski, chief economist ING Germany, told the Financial Times.
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