Germany Business Confidence


Germany: Business confidence remains stable in May

May 22, 2011

Business confidence was steady in May, amid firms' better assessment of current business conditions, which were offset by notions of deteriorating business prospects. In May, the business climate indicator published by the Ifo Institute matched the 114.2 points registered in April (previously reported: 111.1 points, as the Institute used the year 2005 as the base year instead of 2000 to calculate the index). The reading followed on two consecutive declines after the index reached a 20-year high in February and defied market expectations, which had expected business confidence would fall to 113.7 points. That said, the index remains 8.0 points above the level observed in the same month last year, which suggests that businesses remain confident of a growing economy. The May result reflected an improvement in firms' current business situation, with the sub-index remaining on the upward trajectory observed since February 2010, reaching a record high. In contrast, businesses' future expectations for the next six months declined over the previous month, as economic growth is expected to ease somewhat in the coming months.

Author:, Senior Economist

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