Germany: Business sentiment ticks up in December but remains depressed
December 18, 2019
At the close of the year, business confidence rose in Germany from a revised 95.1 in November (previously reported: 95.0) to 96.3 in December. Underlying data showed that the improvement came on the back of improved outlooks on the current and expected business climate; however, on a sectoral level there was some divergence. Nonetheless, “the German economy is heading into the New Year with more confidence”, Clemens Fuest, president of the ifo Institute, noted.
In the manufacturing sector, firms became notably less downbeat regarding expectations, likely in part linked to tentative signs of easing trade tensions between the United States and China. On the other hand, the current situation was deemed less favorable compared to the prior month, with expected production cutbacks and tougher access to credit weighing on businesses’ assessment. The services sector, meanwhile, further signaled robust health as sentiment rose to its highest level in six months. This came on the back of greater satisfaction with the current climate while views on expectations recovered slightly. Less positively, confidence retreated in the trade sector owing to deteriorating views on the expected business climate, whereas their outlook on the current situation improved. Within the construction sector, views on the expected business climate soured and weighed on overall confidence levels; however, firms remained very upbeat regarding the current business situation.
Author: Jan Lammersen, Economist