Germany Business Confidence


Business confidence rises to record-high

Business sentiment improved in December on the back of businesses' better assessment of their current situation and future business prospects. The positive reading bodes well for a continued recovery in economic activity in 2011. The Ifo Business Climate index for industry and trade climbed to 109.9 points in December, up from the 109.3 points registered in November. The December rise defied market expectations, which had seen the index edging down to 109.0 points, and the result marked the highest level in business sentiment on record. Both components of the index (the current situation and the future expectations) improved, reflecting broad confidence in the business environment. The current business situation component continued its healthy rise that began in February and increased to 112.9 in December from 112.3 points in November. Business expectations for the next six months rose from 106.3 points in November to 106.9 points in December. The positive results were buttressed by stronger domestic demand and higher export demand from the country's main trading partners. Wholesale and retail firms reported a more favourable current business situation, as well as improved business expectations for the next six months. In contrast, firms within the manufacturing sector were less optimistic about their future business prospects, despite the assessment of their current business situation remaining unchanged from the previous month. In the construction sector, firms reported a less favourable current business situation compared to November, but offered up a more positive assessment regarding their future business prospects.

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