Germany's Nov business confidence hits 19-year high - survey

24 November 2010 16:26  [Source: ICIS news]

TORONTO (ICIS)--Germany's business confidence continued to improve in November, hitting a 19-year high, as stronger domestic demand offset slower export growth, according to a survey on Wednesday.

Munich-based economics research institute Ifo’s business climate index for Germany rose to 109.3 points in November, from 107.7 in October, it added. 

The widely-followed index is based on a monthly survey of around 7,000 firms in the manufacturing, construction, wholesale and retail sectors.

In manufacturing, firms were “clearly more satisfied” with their business situation than in October, Ifo said.

While German manufacturers expected export growth to be not as strong as in past months, this effect would be more than offset by expected higher demand for capital goods, which are a major element in domestic demand, Ifo said.

The business climate had also improved further in construction, Ifo added.

The surveyed building contractors were more satisfied with their current business situation than in October. However, they were not quite as confident about business development in the coming six months as before, the institute said.

Germany’s economic minister Rainer Bruderle said the November Ifo data confirmed the government’s view that the recovery was continuing. “Germany’s economy remains the growth locomotive in the euro zone,” Bruderle added.

The latest Ifo data suggests that the slowdown in growth in Europe’s largest economy was less marked than feared by many analysts.

Germany’s third-quarter GDP grew 0.7% from the second quarter with higher domestic consumer spending offsetting slower export growth. In the second quarter, the economy grew 2.3% from the first.

In a related report, German economics institute DIW Berlin predicted that the country’s construction sector would grow 2% in 2010 and 0.5% in 2011.

Contrary to earlier fears, there would be no “collapse” in public construction activity next year as the sector would still benefit from government stimulus funds, DIW said.

Meanwhile, in the German chemical industry, production was expected to increase 11% in 2010, after a 10% decline in 2009 from 2008.

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By: Stefan Baumgarten
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