Germany: Business confidence drops to a nearly three-year low in January
January 25, 2019
The fourth consecutive decline in business confidence saw sentiment drop to 99.1 in January—the lowest reading in nearly three years—from 101.0 in December. Consequently, the index fell below the crucial 100-mark that separates optimism from pessimism. This is largely due to a marked increase in pessimism regarding business expectations.
While firms in the trade and services sectors become more optimistic about the current business climate, business expectations deteriorated across all sectors. A notable downturn in sentiment levels was seen in the construction sector, where both the outlook on the current situation and views on business expectations dropped markedly; however, confidence regarding the current climate remained elevated.
Meanwhile, Carsten Brzeski, chief German economist at ING, commented: “The manufacturing sector has been on a downward trend since last August, dragging the entire economy down. In fact, the German economy is currently suffering from a strange and also unique combination of homemade one-off factors [and] a series of external uncertainties.”
Germany Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists expect gross fixed investment to expand 2.8% in 2019, which is down 0.1 percentage points from last month’s forecast. In 2020, the panel sees investment growth moderating to 2.6%.
Author: Jan Lammersen, Economist