• Germany edition
 
Business confidence at seven-month high
Photo: DPA

Business confidence at seven-month high

Published: 25 Jan 2013 11:35 GMT+01:00
Updated: 25 Jan 2013 11:35 GMT+01:00

The Ifo institute's closely watched business climate index for Europe's top economy rose to 104.2 points in January – its highest reading since June – from 102.4 points a month earlier.

Economists polled by Dow Jones Newswires had been pencilling in a more modest rise to 103.0 points. "The German economy made a promising start to the new year," said Ifo president Hans-Werner Sinn.

"The Ifo business climate rose for the third time in succession. Assessments of the current business situation were somewhat more positive after deteriorating last month. Future business prospects improved considerably," Sinn said.

Ifo calculates its headline index on the basis of companies' assessments of their current business and the outlook for the next six months.

The sub-index measuring current business rose to 108.0 points in January, making good the slight decline seen last month. And the outlook sub-index jumped to 100.5 points, its highest reading since May.

"The German economy has put the crisis behind it," said Berenberg Bank economist Christian Schulz.

"Germany is roaring back to growth in the new year 2013." Official gross domestic product (GDP) data showed that Germany turned in its weakest growth in four years in 2012, with an estimated contraction of around 0.5 percent in the fourth quarter alone.

But there is growing consensus that the dip in growth will prove shortlived.

Already earlier this week, the ZEW investor sentiment index soared to the highest levels since the start of the eurozone debt crisis in 2010 as the German economic outlook looks ever brighter.

And on Thursday, another forward-looking indicator, the purchasing managers' index (PMI), notched up its strongest growth in a year. "Signs are growing that the German economy could be heading for a V-shaped rebound in the first quarter of 2013 after output contracted in the fourth quarter of last year," Schulz said.

"The confidence rebound may still take some time to feed through to hard data such as industrial production, but the fact that all surveys (PMIs, ZEW) and financial indicators point in the same direction inspires confidence in an economic rebound," the expert said.

According to the Ifo data, almost all sectors of the economy experienced a boost, with industry, services and construction leading the way.

Schulz believed that Germany is "heading for another extended growth period. This will also help its eurozone partners to export their way out of trouble."

"The crisis is over – at least in Germany and at least if one believes in the forecasting power of the Ifo," said ING Belgium economist Carsten Brzeski.

"All in all, today's Ifo index nicely illustrates the green shoots in the German economy. Even if the current harsh winter weather might delay the blossoming out somewhat, growth should return, leaving the contraction of the fourth quarter quickly behind," he said.

But Capital Economics economist Ben May was not quite so optimistic.

"January's rise in the Ifo survey provides further hope that the estimated sharp fall in fourth-quarter GDP will be a one off," he said.

"Nonetheless, given that the effects of the recent appreciation of the euro are unlikely to have been fully felt by exporters, it is too early to conclude that Germany will record a strong and sustained expansion in 2013," May cautioned.

AFP/jcw

The Local (news@thelocal.de)

Don't miss...X
Left Right

Your comments about this article

14:10 January 25, 2013 by Berlin fuer alles
Give me a break. This is a tiny difference on what was expected over the holiday spending spree. Trying to put a spin on things after the recent election disaster for Dr. Merkyl and Mr. Hyde is all that is happening here. The real stats will come in soon taking in the first quarter of 2013 and it will not make nice reading. Who writes this rubbish anyway? Dr. Merkyl and her cronies are just clasping at straws here knowing full well the real picture is very gloomy. Real wages will fall further and more austerity will be necessary in Germany. Can always get BILD to blame it on the Greeks again though. That might work with the proletariat.
17:24 January 25, 2013 by smart2012
Bfa, let those guys talk. GDP Q4 12 -0.5%. They are now pushing services and construction to bridge the most important data of German economy, ie manufacturing index. And as you can read in January manufacturing index is still below 50, which means contraction.

Yes, Verkel propaganda, but no worry, Germany has already shown in 2012 that it cannot stand alone, as it is too dependent on export (and this has been already highlighted as an issue by eu commission last month)
18:05 January 25, 2013 by Tonne
Oh no, not the green shoots again! Carsten Brzeski should have a word with Norman Lamont about the irresponsibility of such talk - especially in mid-winter.
19:40 January 25, 2013 by Englishted
Well thats alright then because I have been laid off work again ,third time in 12 months ,boom times are always just around the corner ,bullshine.
00:12 January 27, 2013 by smart2012
Englishted, sorry for u. I am moving to Singapore in march, to the real booming atea. If u r interested to follow let me know ;)
Today's headlines
Germany tops penis enlargement table
Do your wurst, doc. Photo: DPA

Germany tops penis enlargement table

Germany is the world’s leader in penis enlargements, with five times as many people in the country undergoing the procedure than anywhere else in the world. Globally, Germany carries out the fourth highest amount of cosmetic surgery operations. READ  

The Local List
The best words in Austrian German
Which one is the Austrian word for tomato? Photo: APA/dpa

The best words in Austrian German

If you’ve lived in Germany, or you learnt Hochdeutsch at school, you may be surprised by some of the language differences between Austria and parts of Germany. READ  

German of the Week
'Doctors made me try everything before weed'
Günter Weiglein. Photo: DPA

'Doctors made me try everything before weed'

Günter Weiglein is one of three men in Germany who is allowed to grow his own cannabis thanks to a court ruling last week. But he tells The Local he’s not celebrating just yet. READ  

Turks in Germany vote for first time
Voters at Berlin's Olympic Stadium on Thursday. Photo: DPA

Turks in Germany vote for first time

Germany’s large Turkish community headed to polling stations on Thursday to vote for the first time in a Turkish election. The Local visits Berlin’s Olympic Stadium which has been turned into a giant voting booth. READ  

Ice Age lion gets its head back
The lion with the missing half of its head. Photo: Hilde Jensen, Universität Tübingen.

Ice Age lion gets its head back

A 40,000-year-old figurine of a lion has been reunited with its head, more than 80 years after it was first found in a cave in southern Germany, following an extraordinary discovery. READ  

German jobless rate rises in July
Photo: DPA

German jobless rate rises in July

Unemployment in Germany rose in July to 6.6 percent, the Federal Employment Agency said on Thursday, blaming the increase on "seasonal reasons". READ  

Your lottery numbers are 9, 10, 11, 12 and 13
The winning numbers in Wednesday night's lotto. Photo: DPA/Lotto

Your lottery numbers are 9, 10, 11, 12 and 13

Three lucky Germans will take home a six-figure prize after an extremely rare lottery draw. The lucky numbers on Wednesday night were 9, 10, 11, 12, 13 and 37. READ  

Germany denies 'land for gas' deal with Putin
Merkel with Poroshenko and Putin in June. Photo: DPA

Germany denies 'land for gas' deal with Putin

UPDATE: Chancellor Angela Merkel and Russian President Vladimir Putin have been working on a secret peace plan for Ukraine, The Independent newspaper reported on Thursday. The report was later denied by the German government. READ  

Space ship brings special cargo for astronaut
A cargo compartment on the ATV. Photo: ESA

Space ship brings special cargo for astronaut

The last European space freighter blasted off to the International Space Station (ISS) on Wednesday, carrying a special treat for the station’s German astronaut. The launch of the German-built supply ship marks the end of an era. READ  

World Cup victory makes Germans thirsty
Beer sales abroad and during the World Cup were behind the rise. Photo: DPA

World Cup victory makes Germans thirsty

Germany’s World Cup victory was also good news for the country’s brewers who saw a welcome reversal in the long-term trend of draining beer sales. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Photo: DPA
Gallery
Five reasons to visit Oktoberfest (and five not to)
Photo: DPA
Society
Huge Bavarian crop circle puzzles crowds
Photo: DPA
Analysis & Opinion
Have Your Say: Should Germany legalize cannabis?
Photo: DPA
Education
Germany's students fail to graduate in time
Photo: DPA
Gallery
Hamburg harbour lit up in blue
Business & Money
JobTalk: 'Application process is failing'
Photo: Bundesarchiv/Bild 183-S45825
Culture
Germany puts 700,000 WWI docs online
Photo: DPA
Society
This man wants to give all of us €12,000 a year
Photo: DPA
Education
Top university switches master's courses to English
Travel
Plans unveiled for bike trail along former Iron Curtain
Photo: DPA
Gallery
The Local List: 12 best words in German
Photo: Europeana.de 1914 - 1918
Gallery
A German soldier's life behind WWI lines
Education
Raising the bar for law & business in Germany
Photo: DPA
Business & Money
JobTalk: All you need to know about working in Germany
Photo: DPA
Features
The Local List Archive - Your guide to all things German
National
Share news tips with The Local Germany
Sponsored Article
Bilingual school turning education on its head
Sponsored Article
CurrencyFair: Why it pays when making overseas transfers
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

3,244
jobs available
Toytown Germany
Germany's English-speaking crowd