• 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

Germany, Europe's top economy, appears to have put the worst of the region's debt crisis behind it, data showed Friday, with business confidence rising to its highest level in seven months.

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
Jobless benefits to get leaner and meaner
Photo: DPA

Jobless benefits to get leaner and meaner

The German government is planning a shake-up of the country’s unemployment benefit system, Hartz IV, by introducing stricter rules on claimants in a move which supporters say will cut bureaucracy. READ () »

Germany's oldest woman dies aged 112
Gertrud Henze. Photo: DPA

Germany's oldest woman dies aged 112

Germany’s oldest woman died at the age of 112 on Tuesday. Gertrud Henze was born on December 8th 1901 and joked her long life was down to never getting married. READ () »

Exchange student 'murderer' stays silent
Police search the area near where Gabriele's body was found in October 2013. Photo: DPA

Exchange student 'murderer' stays silent

The alleged murderer of an exchange student in southern Germany stayed silent in the dock on Tuesday on the first day of his trial. READ () »

European Elections 2014
'If Britain goes, Europe is lost'
Hans-Olaf Henkel (r) celebrates the one-year anniversary of the AfD with leader Bernd Lücke. Photo: DPA

'If Britain goes, Europe is lost'

In an interview with The Local, one of the leaders of Germany's eurosceptic party talks about Europe's future, why Britain is a model country and why he will not work with UKIP's Nigel Farage. READ () »

Girls find live munition in Easter bonfire
Nane, with her father and a picture of the cartridge-laden wood. Photo: DPA

Girls find live munition in Easter bonfire

Two 12-year-old German girls found live ammunition lodged into a branch in an Easter bonfire. It was due to be lit the next day, potentially igniting the cartridges and causing disaster. READ () »

Opinion
'Fracking won't save Germany from Putin'
Photo: DPA

'Fracking won't save Germany from Putin'

Germany's reliance on Russian gas continues to limit the nation's diplomatic leverage in the Ukraine crisis. But as leaders once again explore fracking as an alternative, critics told The Local the risks were too high. READ () »

German rapper-turned-jihadist 'killed in Syria'
Deso Dogg. Photo: YouTube screenshot

German rapper-turned-jihadist 'killed in Syria'

UPDATE: A German former rapper who joined jihadists fighting in Syria was reported dead on Tuesday by jihadist sources, but hours later some retracted the claim, saying he was still alive. READ () »

Have Your Say
Who should pay for Germany’s roads?
Photo: DPA

Who should pay for Germany’s roads?

A top politician's suggestion that drivers should be charged €100 a year towards the upkeep of Germany's roads was met with derision on Tuesday. But how should Germany fill the black hole it its infrastructure budget? READ () »

Tax income hits March record
Finance Minister Wolfgang Schäuble with Chancellor Angela Merkel. Photo: DPA

Tax income hits March record

A record amount of cash flowed into German government coffers in March thanks to land, beer and incomes taxes, a monthly report from the finance ministry revealed on Tuesday. READ () »

Union bosses call for later starts in World Cup
Photo: DPA

Union bosses call for later starts in World Cup

German unions called on Tuesday for shift workers to be granted later starts during the football World Cup in Brazil this summer. Some of the matches begin at midnight due to the time difference. READ () »

RECEIVE OUR NEWSLETTER AND ALERTS
Photo: DPA
National
Let us start work later after World Cup nights, unions says
Photo: DPA
Society
Crystal meth use hits record level
Photo: DPA
Rhineland
Elderly man taped €200,000 to his genitals
Photo: DPA
Business & Money
What's the unemployment rate in your area of Germany?
Photo: DPA
Gallery
Nine ways to celebrate Easter like a German
Photo: Galerie Bilderwelt
Gallery
World War I in colour photos
Photo: DPA
Society
JobTalk: Why you should teach English in Germany
Photo: DPA
National
330,000 sign up against TV licence fee
Photo: DPA
Hamburg
School kids hospitalized after 'porno' party
Photo: Submitted
Frankfurt
'I'll get even with my old pal Schwarzenegger'
Photo: DPA
Gallery
Ten great inventions you (probably) didn't know were German
Photo: J. Arthur White
Berlin
Clashes in Berlin as refugees tear down their own camp
Advertisement:
Photo: DPA
Gallery
Munich's baby polar bears are finally named
Photo: DPA
Gallery
The 10 best German employers to work for
CurrencyFair
Sponsored Article
Why it pays to avoid banks when making overseas transfers
Mr. Lodge
Sponsored Article
How to find a furnished rental in Munich
Sponsored Article
How to make a lasting impression in business
Hult International Business School
Sponsored Article
What they don't teach you at Business School
Photo: DPA
Society
Nine jobs you can only do 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
Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

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

3,050
jobs available
Toytown Germany
Germany's English-speaking crowd