Germany's business confidence rises slightly in June - Ifo group

22 June 2010 20:20  [Source: ICIS news]

TORONTO (ICIS news)--Germany's business confidence improved slightly in June from May, with the outlook for foreign business still seen as very good even though export growth is slowing, an economic research institute said on Tuesday.

The Ifo institute’s widely-watched business climate index for Germany was 101.8 in June, compared with 101.5 in May. Economists polled by a news agency had expected a decline to around 101.

The increase in the Ifo index – which is based on survey’s of 7,000 business executives – compared with June's decline in the ZEW economic sentiment index, which was based on an analysts’ survey.

Munich-based Ifo said that generally, manufacturers in Europe’s largest economy were assessing their current business situation favourably.

However, manufacturers’ six-month business outlook had dimmed somewhat, the group said. Exports were not expected to grow as strongly as up to now, it said. Still, the overall outlook for foreign business was “still regarded as very good,” it said.

Manufacturers’ employment plans indicated that they intended to keep staffing at current levels, the institute added.

In a separate statement, Ifo said that exporters should welcome the increase in competitiveness from the euro’s decline since the start of the year. The decline would help them cope with the fall-out from the economic crisis, which was not yet over, Ifo said.

However, about half of Germany’s exports were going to EU partners and were as such not affected by the euro’s decline, it added.

Ifo also said that the euro would be jeopardised if EU governments failed to rein in budget deficits and cut debts.

According Germany’s central bank, the Bundesbank, the country’s economy should grow by 1.9% in 2010. Chemical production is expected to increase by 8.5% this year, after a 10% decline in 2009, producers group VCI said.

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