Germany: Business confidence climbs to the highest level in more than three years
October 22, 2010
Business confidence continues to rise, suggesting that the recovery will remain strong. The Ifo Business Climate Index for industry and trade rose to 107.6 points in October from 106.8 points in September, defying market expectations, which had expected the index to fall to 106.4 points. The October reading marked the sixth consecutive month of improving sentiment, driving the index to the highest level since May 2007. Business confidence improved as both components increased over the previous month. The current business situation component increased from 109.8 points in September to 110.2 points in October, remaining on its positive trend started in February. In addition, the business expectations indicator jumped from 103.9 points in September to 105.1 points. At the sector level, firms in the manufacturing sector reported their current business situation to be slightly more favourable than in the previous month and were even more upbeat about their prospects. Meanwhile, businesses in the construction sector reported a somewhat less favourable current business situation compared to September, but they evaluated their future business prospects as more positive. Wholesaling businesses gave a more positive assessment of both their current and future business situation. Only retail respondents assessed their current business situation, as well as their future business expectations as less favourable than in September. Nevertheless, retail firms still maintain a healthy business sentiment.
Author: Ricardo Aceves, Senior Economist