Germany: Business confidence remains elevated despite moderating in March
German business confidence continued to moderate at the close of the first quarter of the year. In March, the confidence index slipped to 114.7 points from 115.4 points in the prior month, slightly undershooting market expectations. Confidence still remained solidly above the crucial 100-point mark separating optimism from pessimism among businesses in Germany.
The moderation in confidence came on the back of firms’ slightly less positive assessment of the current business situation, and slightly lower business expectations. Business expectations dampened on the back of an increased risk of protectionism in the U.S. Sectoral data showed that the downturn in confidence was chiefly due to a deteriorating business climate in the manufacturing sector, as the sector grew less optimistic about future business expectations. In contrast, the manufacturing firms’ view on the current business situation improved somewhat. Demand remained strong, and businesses anticipated a pick-up in production.
While sentiment in the wholesaling sector remained unchanged, wholesaling firms’ assessment of the six months ahead became less positive, whereas their assessment of the current business situation improved slightly. Business confidence in the construction sector rose, chiefly due to a more positive outlook on business expectations. In the retailing sector, however, confidence dropped significantly on the back of deteriorating outlooks on the current business situation and business expectations.