Germany: Business confidence falls again in April as signs of economic moderation emerge
April 24, 2018
Sentiment among German businesses eased again in April, continuing the trend seen in the first quarter of the year as signs emerged that 2017’s strong economic momentum could be waning. The business confidence index fell to 102.1 points in April, down from a revised 103.3 points in the prior month; the Ifo Institute, which publishes the business confidence index, changed the base year in April from 2005 to 2015. Although April was the third consecutive month in which confidence decreased from the previous month, the index remained above the crucial 100-point mark that separates optimism from pessimism among firms.
The moderation came on the back of less optimistic views on the current business situation, as well as lower business expectations. A sector-by-sector picture showed that the downturn in sentiment was sufficiently broad-based, with three of the four sub-sectors recording lower sentiment levels; the construction sector was the sole sector in which sentiment picked up, hitting a new record high level. Optimism in the construction sector was driven by improved views on both the current and the expected business situations.
The manufacturing sector recorded its third consecutive month of deteriorating sentiment. Firms’ view on the current business situation remained positive, but their outlook on business expectations fell to the lowest level since August 2016. Among firms in the service sector, the decrease in sentiment was chiefly due to a drop in business expectations. In the wholesale and retail trade, companies assessed the current business situation and the short-term economic outlook less positively.
Germany Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists expect gross fixed investment to expand 3.9% in 2018, which is unchanged from last month’s forecast. In 2019, the panel sees investment growth moderating to 3.3%.
Author: Jan Lammersen, Economist