Germany business climate dips but remains ‘excellent’ – Ifo

LONDON (ICIS)–Sentiment among German businesses remains “excellent” ahead of the Christmas holiday, but it is no longer quite as euphoric as last month, the country’s Ifo economic research group said on Tuesday.

Ifo said that its widely-followed business confidences indicator for Europe’s largest economy edged down to 117.2 points in December, from 117.6 in November.

The indicator is based on about 7,000 monthly survey responses from firms in manufacturing, construction, wholesaling and retailing.

The slight dip in the indicator was due to less optimistic business expectations than last month.

Companies’ assessments of their current business situation, by contrast, were more positive this month, the group said.

“German businesses are full of festive spirits,” Ifo added.

In manufacturing, the index dipped down from November’s record high.

Manufacturers are no longer quite as optimistic about the months ahead, Ifo said.

However, they are more positive about their current business situation, primarily due to an upturn in orders.

Germany-based manufacturers expect prices to continue to increase, the group added.

In wholesaling, the business climate deteriorated slightly, but remains favourable.

Wholesalers were less satisfied with their current business situation and their business outlook than last month.

Retailers, by contrast, reported excellent Christmas business, but fewer firms expect business to improve further in the months ahead.

In construction, the business climate index rose. Contractors upwardly revised both their assessment of the current business situation and their expectations, Ifo said.

Analysts at German regional state bank NordLB said that the latest Ifo survey confirmed that Germany’s economy was going “full steam into a boom phase”, with GDP growth next year to reach 2.6%.

With the strong economy in Germany and Europe, the European Central Bank (ECB) should pursue its exit from quantitative easing “consistently and swiftly”, the analysts added.

Pictured: Christmas market in Breitscheidplatz, Berlin. Ifo said on Tuesday that German businesses “are full of festive spirits”
Picture source: Simone Kuhlmey/PACIFIC PR/SIPA/REX/Shutterstock