• Germany's news in English
 

Business confidence at seven-month high

Published: 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)

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
Greece crisis
Top US economists urge Merkel to cut debt
Photo: DPA

Top US economists urge Merkel to cut debt

Renowned economists Thomas Piketty, Jeffrey Sachs and three others urged German Chancellor Angela Merkel on Tuesday to agree to cut Greece's debt to "avoid further disaster". READ  

Greece crisis
Merkel: 'still no basis' for aid to Greece
Angela Merkel arriving in Brussels on Tuesday. Photo: EbS

Merkel: 'still no basis' for aid to Greece

UPDATE: Chancellor Angela Merkel offered no new insights into her thinking as she arrived in Brussels for a meeting of eurozone government heads on Tuesday, saying that it was up to Greece to make a move and show willing. READ  

Mafia suspects arrested at Lake Constance
Lke Constance, a 'stronghold' of the mafia. Photo:DPA

Mafia suspects arrested at Lake Constance

Police arrested eight Italian citizens on Tuesday morning at Lake Constance in Baden-Württemberg on suspicion of involvement in the ’Ndrangheta, Calabria’s feared mafia organisation. READ  

Greece crisis
Voters back Schäuble's hard line on Greece
Wolfgang Schäuble in the Bundestag. Photo: DPA

Voters back Schäuble's hard line on Greece

A poll published on Tuesday shows that at the peak of their tough talk towards Greece, Chancellor Angela Merkel and her Finance Minister Wolfgang Schäuble have been earning even greater confidence from German voters. READ  

'Hackers' give orders to German missile battery
Bundeswehr soldiers operating a Patriot missile launcher. Photo: DPA

'Hackers' give orders to German missile battery

German-owned Patriot missiles stationed in Turkey were briefly taken over by hackers, according to media reports on Tuesday. READ  

Workers dismantle Frankfurt Euro sculpture
A worker on a crane removes stars from the Euro sculpture in central Frankfurt. Photo: DPA

Workers dismantle Frankfurt Euro sculpture

As a possible Greek exit from the eurozone looms ever larger, threatening to change the face of the euro forever, the currency's home city of Frankfurt is giving its famous Euro sculpture a much-needed facelift. READ  

Auschwitz trial
Prosecutors seek 3-1/2 year sentence
Oskar Gröning was an SS guard at Auschwitz. Photo: DPA

Prosecutors seek 3-1/2 year sentence

German prosecutors on Tuesday said they were seeking three and a half years' jail time for a former SS officer known as the "Bookkeeper of Auschwitz". READ  

Hot weather to bring tornados and lightning
With this blitz Gerry'll get a taste of his own medicine. Photo: DPA

Hot weather to bring tornados and lightning

After Germans were able to sneak out to restock their wurst and sauerkraut rations during few cool hours on Monday, another heat wave is sweeping across the country on Tuesday, sending people running back to the shade for cover. READ  

July heatwave
Hot dogs lap up liver sausage sundaes
Ice-cream maker Leonardo Caprarese with golden retriever Oscar, enjoying a delicious scoop of Leberwurst ice cream. Photo: DPA

Hot dogs lap up liver sausage sundaes

Hounds languishing in the July heat around Bremen have been treated to a very special snack to cool them down - but it's one that might put humans off their lunch. READ  

Berlin growing twice as fast as expected
Population growth is putting strains on city planning. Photo: DPA

Berlin growing twice as fast as expected

The Berlin senate revealed on Monday that the capital is growing at double the pace that city planners had previously expected. But after decades of stagnation the growth is seen as positive. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Gallery
Police seize pensioner's WW2 heavy weapons haul
National
How to survive the Europe-wide heatwave
Sport
Is Schweini already out of the door at Bayern?
Politics
How German media shaped the Greece crisis
National
Car assembly robot crushes worker at Volkswagen
Rhineland
Weathermen red-faced over heatwave snow warning
Society
An eye for an eye? Mum protects child in playground with pepperspray
National
As it happened: Queen Elizabeth's final day in Germany
National
As it happened: Queen Elizabeth's second day in Germany
National
Queen Elizabeth II's first day in Germany - as it happened
National
Bus passengers tell fake racists where to get off
Politics
What's really in the Queen's handbag?
National
Germans say USA doesn't respect freedom
National
Yes, you CAN buy adult e-books before 10pm in Germany
VIDEO: Watch a 93-metre turbine crash to earth in slow motion
Gallery
Who's got a shot at the German Film Awards
Rhineland
Anger over 'child-free' beer garden
National
How do you do, Majestät?
National
Man defends right to pee in public with tear gas
Features
The Germans who won Waterloo for the British
Frankfurt
Should Germany ban circus animals?
Hamburg
Where people are having the most sex in Germany
Culture
Who Wants to be a Millionaire? Not this student...
National
Dresden's three-decade-long red light
Politics
Upper house calls for gay marriage now
Berlin
Berlin named 3rd-best city worldwide
Sport
In search of the toughest firefighter
Business & Money
German firms shine for European engineering students
Gallery
Hitler's paintings up for auction
National
German's 70-year search for murdered US pilot
Politics
What the G7 leaders agreed at Elmau
Business & Money
What really makes Germans happy
National
Playmobil builder leaves worldwide legacy
National
The car share that became a drug run
Politics
What Snowden revealed to Germany
Rhineland
Why wolf cubs are being raised by hand
National
Hitler's booze cave found
National
Environment makes Germany worth living in
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

6,866
jobs available
Toytown Germany
Germany's English-speaking crowd