Brandenburg Gate in Berlin, Germany

Germany Business Confidence September 2019

Germany: Business confidence crawls up in September from near seven-year low in August

German business sentiment inched up to 94.6 in September from 94.3 in the prior month, largely thanks to an improvement outlook on the current situation as the views on business expectations worsened. September’s print marked the first time in six months that sentiment did not fall from the prior month as “the downturn is taking a breather”, according to Clemens Fuest, president of the ifo Institute.

The manufacturing sector remained mired in contraction and depression; both the outlook on the current situation and the views on business expectations remained entrenched in pessimistic territory. Firms in the trade sector also became less upbeat about the current and expected situation. This is in stark contrast to the services sector, which saw a recovery in the outlook on both the current and expected situation. Meanwhile, business expectations in the construction sector became more optimistic while contractors remained cheerful regarding the current situation.

“A breather but no relief”, commented Carsten Brzeski, chief economist at ING Germany, on the data release. Brzeski continued to state that “the small increase in the ifo index does not take away the fact that the German industry continues to suffer from structural changes and the ongoing trade conflict. […] The likelihood of another contraction of the German economy in the third quarter and hence a technical recession increases almost by the day.” Brzeski added, “it is the lack of any signals of an imminent rebound which is more concerning.”

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