Germany Business Confidence October 2019

Germany

Germany: Business confidence stable in October

October 25, 2019

Business sentiment in Germany was stable at 94.6 in October from the prior month; however, the underlying data revealed that businesses became more pessimistic regarding the current climate and slightly less downbeat on business expectations. “The German economy is stabilizing”, according to Clemens Fuest, president of the ifo Institute.

Sentiment among manufacturers ended its downward spiral: Goods-producers are noticeably less negative regarding business expectations, although their views on the current climate moderated slightly. Additionally, for the first time in over six years, capacity utilization fell below the long-term average of 83.7%. Confidence in the trade sector, meanwhile, improved on greater expectations in wholesale, but views on the current climate were less rosy across the sector. Within the services industry, business sentiment was unchanged due to less satisfaction regarding the current climate being offset by rosier expectations. On the other hand, sentiment in the construction sector fell as both views on the current climate and business expectations eased.

Carsten Brzeski and Inga Fechner, chief economist and economist at ING Germany, respectively, commented that the latest release brought “some relief to Germany’s economic toxic mix” of external headwinds, the global manufacturing slump and domestic structural weaknesses. “What is worrisome currently is the fact that the services sector seems to have lost its immunity against the manufacturing slowdown”, they added that as such, “calls for German stimulus will not hush any time soon.”

FocusEconomics Consensus Forecast panelists expect gross fixed investment to expand 1.3% in 2020, which is unchanged from last month’s forecast. In 2021, the panel sees investment growth moderating to 2.0%.


Author:, Economist

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Germany Business Confidence October 2019

Note: Ifo Business Climate Index, 2015=100.
Source: Ifo Business Survey.


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