Brandenburg Gate in Berlin, Germany

Germany Business Confidence November 2019

Germany: Business sentiment remains depressed in November despite marginal uptick

Business confidence in Germany improved marginally as the ifo Business Climate Index rose from 94.7 in October to 95.0 in November. Underlying data showed that the fractional rise was driven by improved views on both the current situation and expectations.

Looking at sector-level data showed that the manufacturing sector remained deeply entrenched in recessionary territory. Views on the current climate deteriorated among goods producers; however, their outlook on expectations improved somewhat despite a still disappointing order book situation. Anecdotal evidence points to further manufacturing output cutbacks in the near-term. Firms in the construction sector also held less upbeat views on the current climate, while their views on expectations became less rosy too. More positively, sentiment in the service sector improved on the back of more upbeat assessments of the current and expected business situation. In the trade sector, meanwhile, confidence rose strongly. Companies were more satisfied with the current situation and their views on expectations improved as well. Clemens Fuest, president of the ifo Institute, noted that “the signs are that business will be very good this Christmas.”

Carsten Brzeski, chief economist at ING Germany, noted that the latest data “added more evidence to a tentative bottoming out of the German economy. […]. However, bottoming out does not mean a rebound.”

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