Brandenburg Gate in Berlin, Germany

Germany Business Confidence November 2018

Germany: Business confidence moderates in November

Business confidence in Germany slipped from 102.9 in October to 102.0 in November, dropping for the third consecutive month but remaining above the 100-point mark that separates optimism from pessimism.

A sectoral breakdown showed a broad-based malaise, with all four subsectors recording decreasing sentiment. The construction sector, which had hitherto been the star performer, saw a marked drop in confidence; contractors lowered their assessment of the business situation and became significantly less optimistic about the expected business situation. In the manufacturing sector, firms scaled back their assessments of both the current and expected business situation. On the other hand, services firms were more optimistic about the current business situation than a month prior. They became less optimistic about business expectations, however. Meanwhile, the trade sector showed a mixed picture: Retailers’ views on the current situation improved noticeably, while wholesalers’ outlook on the current state-of-business deteriorated.

Carsten Brzeski, chief German economist at ING, commented: “A lot has been said and analysed about the state of the German economy. […] For now, strong domestic fundamentals, the weak euro and some (temporary) relief from possible external shock factors like Brexit and trade all bode well for a rebound of the German economy going into 2019. However, some uncertainty remains and the search for light in the dark and the real strength of the German economy will continue. […] A swift and strong rebound is becoming increasingly unlikely […].”

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