Germany: Business confidence unexpectedly climbs to record-high
November 24, 2010
Business confidence surged, amid an optimistic economic outlook. The Ifo Business Climate Index for industry and trade jumped from 107.7 in October to 109.3 points in November, surprising private sector analysts' expectations, which had the index edging down to 107.5 points. The November reading marked the seventh consecutive month of improving sentiment, pushing the index to the highest level since a reunified Germany two decades ago. Business confidence improved as both components of the index (current situation and expectations) rose over the previous month. The current business situation component increased from 110.2 points in October to 112.3 points in November, continuing the positive trend which began in February. Moreover, businesses became more upbeat over their prospects for the next six months, with the business expectations gauge rising from 105.2 points in October to 106.3 points in November. At the sector level, the improvement in business sentiment was broad-based. In the manufacturing sector, firms reported to be more satisfied about their current business situation and were more upbeat about their future business prospects. Wholesaling firms also provided a positive assessment of both their current business situation and future business expectations. Although retail respondents reported a somewhat less optimistic assessment about their current business situation, they assessed their near-term business to be positive. Finally, in the construction sector, businesses reported a more favourable current business situation compared to October, but were less upbeat regarding their future business expectations.
Author: Ricardo Aceves, Senior Economist