Germany: Business confidence rises to record-high level
January 21, 2011
Business sentiment rose to the highest level on record, suggesting that firms are off to a vigorous start to the new year. The Ifo Business Climate index climbed to 110.3 points in January from 109.8 points observed in December. The reading, which marked the eighth consecutive month of improving business sentiment, represented the highest level since 1991, overshooting market expectations, which had seen the index remaining steady. The business expectations component ? one of the two components of the business climate indicator ? continued its upward trend, increasing from 106.8 points in December to 107.8 in January. In contrast, the current business situation gauge remained virtually unchanged at 112.8 in January (December: 112.9 points), bucking the upward trend observed since March 2010. In the manufacturing sector, firms reported a more favourable current business situation, as well as improved business expectations for the second half of the year. In the same vein, construction firms reported to be more satisfied with their current business situation and offered a more optimistic assessment about their future business prospects. Only wholesale and retail firms were less optimistic about their current business situation and their expectations compared to the previous month.
Author: Ricardo Aceves, Senior Economist