German business confidence at one-year high – Ifo institute

24 September 2009 15:00  [Source: ICIS news]

TORONTO (ICIS news)--German business confidence has reached its highest level in the past 12 months as the outlook continues to improve, the country’s Ifo economic research institute said on Thursday, citing its latest business climate survey for September.

The institute’s Ifo climate index was at 91.3, up from 90.5. The index is based on around 7,000 monthly survey responses of firms in manufacturing, construction, wholesaling and retailing.

As for the near-term outlook, there was a balance between pessimists and optimists among companies, the institute said, adding: “In light of the catastrophic developments over the past twelve months, this is good news.’

But despite the improvement from August, by far the greater number of firms still assess their current business situation as poor, Ifo said.

In manufacturing, firms no longer see their present business conditions quite as negatively as in previous months, Ifo said.

But while manufacturers were more confident on the near-term outlook, in particular for exports, more firms reported they planned to cut jobs, the institute said.

In wholesale and retail, the Ifo index rose from August, but firms in construction and building were more pessimistic than in the previous survey, the institute said.

Economists have warned that Germany’s budding recovery could crumble amid rising unemployment into 2010.

Also, fiscal stimulus measures such as the “cash-for-clunkers programme", which supported the economy this year, were unlikely to be renewed after federal elections on Sunday due to the country’s rising debt burden, they said. 

The elections are expected to result in the dissolution of Chancellor Angela Merkel’s coalition government between her Christian Democrats and the Social Democrats.

According to the most recent forecasts, Germany’s GDP was expected to shrink by less than 5% this year, while chemical production was expected to decline by 10% year on year, with chemical sales down 12%.

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By: Stefan Baumgarten
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