German business climate continues to worsen in July – survey

25 July 2012 14:35  [Source: ICIS news]

LONDON (ICIS)--Germany’s business climate worsened for the third month in a row in July amid continuing negative impacts from the eurozone debt crisis, a research group said on Wednesday.

Munich-based Ifo said that its monthly business climate indicator for Europe’s largest economy fell from 105.2 points in June to 103.3 points in July - the lowest level since March 2010. The index is based on responses from about 7,000 firms in Germany’s manufacturing, construction, wholesale and retail sectors. The firms are asked to give their assessments of the current business situation and their expectations for the next six months.

“The euro crisis is having an increasingly negative impact on the German economy,” Ifo said.

The business climate in manufacturing deteriorated significantly as manufacturers assessed their current business situation much less favourably than in June, the group said. 

Manufacturers’ capacity utilisation was lower in July and their business outlook expectations fell considerably. However, export expectations declined only slightly, Ifo said.

In the construction sector, the business climate indicator also fell in July. Construction firms surveyed were considerably more sceptical about future business developments, Ifo said.

Retailers, on the other hand, assessed both their current business situation and their six-month business outlook more favourably than in June. However, in wholesaling, the business climate continued to deteriorate in July, Ifo said.

In a separate statement on Wednesday, Ifo said that it estimates Germany’s losses at €82bn ($99bn) should Greece become illiquid and leave the eurozone, and at €89bn if Greece stays in the eurozone.

The estimates include contributions Germany made to the financial rescue packages for Greece and the purchases of Greek bonds by Germany’s central bank, Ifo said. However, not included are write-offs and losses Germany’s banks and insurance firms would have to take, the group said.

($1 = €0.83)

Paul Hodges studies key influences shaping the chemical industry in his Chemicals and the Economy Blog


By: Stefan Baumgarten
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