Business Confidence in Germany Hits Highest Level in Almost Two Years

Douglas A. McIntyre

Germans, buoyed by an improving economy in Europe, and likely a modest recovery of the U.S. economy, have become spectacularly confident about business prospects. According to official statistics bureau Ifo:

The Ifo Business Climate Index for industry and trade in Germany continued to rise. Companies are more satisfied with their current business situation. Their optimism regarding future business developments – although slightly cautious – also grew. The German economy moved up a gear.

The Business Climate index rose to 105.7 from 106.2 in August. The Business Situation Index reached 112 up from 110.1 in July, and the Business Expectations Index rose to 103.3 from 102.4.

The improvement was spread across most industries.

According to Kai Carstensen Director of the Ifo Center for Business Cycle Analysis and Surveys:

The business climate indicator in manufacturing rose significantly to its highest value since April 2012. Assessments of the current business situation were considerably better than last month. Business expectations also continued to brighten. Firms expect stronger impulses from export business.

The business climate index in retailing edged downwards. This is primarily due to somewhat less positive assessments of the current business situation, while business expectations brightened slightly. In wholesaling, on the other hand, the business climate improved significantly. Wholesalers are far more satisfied with their current business situation. Furthermore, business expectations are positive for the first time since April 2012.

In construction the business climate index fell, but nevertheless remains above its long-term average. Assessments of the current business situation are slightly less favourable than last month. Contractors are more cautious about future business development