Germany Business Confidence February 2016


Germany: Sentiment among German businesses drops to over-one-year low in February

February 23, 2016

Confidence among German businesses continued to weaken in February. The business confidence index, elaborated by the Ifo Institute, came in at 105.7 in February, marking the lowest reading in 14 months (January: 107.3). January’s result undershot market expectations of the index dropping marginally to 106.7. According to the institute, the setback mainly reflects that firms became more pessimistic regarding future business development. In fact, for the first time in 16 months, business expectations fell into negative territory. By contrast, firms’ assessment of their current situation improved slightly in February. Overall, the Ifo Institute commented on February’s result stating that, “German businesses expressed growing concern, especially in manufacturing.”

Sentiment fell notably among manufacturers, driven by worsening business expectations, while their assessment of the current situation improved slightly. In addition, confidence in the wholesaling and retail sectors dropped, too. Conversely, construction was the only sector with rising confidence. Sentiment mainly strengthened on the back of a brighter assessment of the current business situation.

FocusEconomics Consensus Forecast panelists expect gross fixed investment to expand 2.4% in 2016, which is unchanged from last month’s forecast. In 2017, the panel sees investment growth accelerating to 2.8%.

Author: Teresa Kersting, Economist

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Germany Business Confidence Chart

Germany Business Confidence February 2016

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

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