Germany Business Confidence January 2016

Germany

Germany: German businesses less confident at the outset of the year

January 25, 2016

Confidence among German businesses weakened at the outset of 2016. The business confidence index, elaborated by the Ifo Institute, came in at 107.3 in January, marking the lowest reading in nearly a year (December: 108.6). January’s result undershot market expectations of the index dropping only marginally to 108.4. According to the institute, the setback mainly reflects that firms grew less confident about future business development. In addition, companies were slightly less positive about the current business situation. Overall, the Ifo Institute commented on January’s result stating that, “the year started with an unpleasant surprise for the German economy.”

Sentiment fell among manufacturers, who lowered their expectations for future business notably but their assessment of the current situation only slightly. Sentiment in the construction sector also declined, but still comfortably exceeded its long-term average. Meanwhile, the mood among retailers was broadly stable while wholesalers turned more optimistic in January.

FocusEconomics Consensus Forecast panelists expect gross fixed investment to expand 2.4% in 2016, which is down 0.2 percentage points from last month’s forecast. In 2017, the panel sees investment growth accelerating to 2.9%.


Author: Teresa Kersting, Economist

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Germany Business Confidence January 2016

Note: Ifo Business Climate Index, 2000=100.
Source: Ifo Business Survey.


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