• 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
German kids 'growing up sitting down'
Photo: DPA

German kids 'growing up sitting down'

Too much sitting is bad for you, as we all know. But health experts warned on Monday that half of German children have firmly adopted the sedentary and damaging habits of their parents. READ  

Business makes confident start to 2015
A worker checks compensators in a Baden-Württemberg factory. Photo: DPA

Business makes confident start to 2015

German businesses are confident about the outlook for Europe's biggest economy, a new poll showed on Monday, as a weaker euro and falling oil prices are set to boost the country's exporters. READ  

'Stick to the plan': Germany to Greece
Syriza leader Alexis Tsipras celebrates the party's election victory on Sunday. Photo: DPA

'Stick to the plan': Germany to Greece

UPDATE:German Chancellor Angela Merkel expects the new Greek government to uphold its commitments to international creditors, her spokesman said Monday after the electoral triumph of Greece's anti-austerity leftists Syriza. READ  

Give refugees holiday homes: Berlin official
Monika Herrmann attempts to mediate in a refugee dispute in 2014. Photo: DPA

Give refugees holiday homes: Berlin official

Amid rising tensions around the Pegida movement, a Berlin official stirred alarm on Monday with a proposal to commandeer private holiday apartments to house asylum seekers. READ  

Parties welcome Gabriel's Pegida meeting
Vice-Chancellor Sigmar Gabriel in Dresden on Friday. Photo: DPA

Parties welcome Gabriel's Pegida meeting

Politicians welcomed Vice-Chancellor Sigmar Gabriel's controversial decision to meet members of anti-Islam movement Pegida on Friday. READ  

Self-driving cars to hit German Autobahn
Hopefully there won't be any roadworks on the test stretch. Photo: DPA

Self-driving cars to hit German Autobahn

A section of the A9 Autobahn in Bavaria will be converted into a test route for self-driving cars, Transport Minister Alexander Dobrindt said on Monday. READ  

 Deutsche Bahn wins allies in air cartel suit
Deutsche Bahn's HQ in Potsdamer Platz in Berlin. Photo: Volker Emersleben/DB

Deutsche Bahn wins allies in air cartel suit

Rail operator Deutsche Bahn said Sunday it has been joined by several companies in a 2.9 €billion euro lawsuit against Lufthansa and other airlines for fixing air cargo prices. READ  

Merkel phones Putin over Ukraine violence
German Chancellor Angela Merkel and Russian President Vladimir Putin. Photo: DPA

Merkel phones Putin over Ukraine violence

Chancellor Angela Merkel urged her Russian counterpart Vladimir Putin in a phone call on Sunday to "put pressure" on Ukraine's pro-Kremlin separatists to end a recent upsurge in violence. READ  

New anti-Islam march draws 17,000  people
The Pegida demonstration in Dresden on Sunday. Photo: Arno Burgi/dpa

New anti-Islam march draws 17,000 people

Thousands of people joined a march by the anti-Islamisation PEGIDA movement on Sunday, the group's first rally since threats surfaced against the group and its leader resigned over "Hitler" photos. READ  

Anti-Muslim rallies 'hurt Germany's image'
Police prepare for the demonstration on Sunday on Dresden's Theaterplatz. Photo: Arno Burgi/dpa

Anti-Muslim rallies 'hurt Germany's image'

Hours before a new rally in Dresden by the anti-Islamisation PEGIDA movement on Sunday, Foreign Minister Frank-Walter Steinmeier said the group's sentiments were harming the nation's image. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Gallery
The best regional foods TTIP opponents want to protect
Photo: DPA
Features
The rise and spread of Pegida
Photo: Shutterstock
Culture
This cosplayer did not think his plan through
National
Europe in statistics - from Spain to Sweden
Photo: DPA
Politics
The Local's report from Pegida's largest ever demonstration.
Sponsored Article
Top-notch tech boosts bilingual schools
National
Six stories that will rock Germany this year
Photo: DPA
National
Terror alert at a new high. Should you be worried?
Dresden skyline and river by night. Photo: DPA
Politics
What does Dresden have against Muslims?
Photo: DPA
National
What were your favourite news stories of 2014?
Gallery
Top 12 German idioms
National
Why has The Local got a new logo?
Photo: DPA
National
This German was abducted and tortured by the CIA
Culture
10 top tips for partying in Germany
Photo: DPA
Technology
What does the Chancellor see as the future of the internet?
Photo: DPA
Berlin
The Local's series on 25 years since the fall of the Berlin Wall
Photo: DPA
Business & Money
JobTalk: All you need to know about working in Germany
National
Share news tips with The Local Germany
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

1,428
jobs available
Toytown Germany
Germany's English-speaking crowd