• Germany edition
 
Hundreds of great job opportunities for foreign professionals at Germany's top employers - in cooperation with Monster, Experteer, Stepstone, and CareerBuilder.
What
Where
3,323
jobs available
Find English-speaking professionals with The Local.
Advertise a vacancy
Fading confidence fuels ECB rate cut talk
Photo: DPA

Fading confidence fuels ECB rate cut talk

Published: 24 Apr 2013 12:35 CET

The Ifo economic institute's closely watched business climate index fell to 104.4 points in April from 106.7 points in March.

That was a bigger drop than expected: analysts had been pencilling in only a very slight decrease this month to 106.2 points.

"Although the majority of companies assessed their current business situation as good, they were far more cautious than last month. Their expectations regarding future business developments were also lower. The German economy is taking a breather," said Ifo economist Kai Carstensen.

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 slipped to 107.2 points in April - its lowest level in four months -- from 109.9 points in March. And the outlook sub-index fell by two whole points to 101.6 points.

Analysts said the drop - the second consecutively monthly decline - wiped out the sharp increase seen in February, when the index reached a 10-month high.

"Both the current assessment and expectations indicators decline by around two points in April, a sign that the German economy has not been spared from the ongoing slowdown," said Newedge Strategy analyst Annalisa Piazza.

"All in all, it is a quite gloomy report that confirms risks for the German economy in the first half of 2013," she said.

"The decline clearly opens the door for a vivid discussion about a rate cut as early as in May as even the eurozone's biggest economy is now losing momentum," Piazza added.

In response to the debt crisis, the ECB slashed its key interest rate to a historic low of 0.75 percent last July and has held it there since. But financial markets have speculated about a further cut in order to pull the eurozone economy out of recession.

Carsten Brzeski at ING DiBa said the Ifo data would at least put such a move back on the agenda.

"All in all, this week's confidence indicators send a warning signal that 2013 is not 2009. Any rebound of the German economy after the contraction will be much bumpier and weaker than four years ago," he said.

And worsening prospects for the German economy "could at least increase the silent support for more ECB action," Brzeski suggested.

A rate cut may not kick-start economies but would weaken the euro exchange rate, which would offer some welcome relief for German exporters, the expert said.

Ben May at Capital Economics said the Ifo data "will add to concerns that the German recovery is starting to falter."

"In all, then, while Germany still looks in better shape than the eurozone as a whole, we see the economy stagnating over the year as a whole," May said.

Christian Schulz at Berenberg Bank also believed focus would now turn to the ECB.

"Resistance to a rate cut will be crumbling. Even Bundesbank President (Jens) Weidmann had sounded marginally more dovish recently," he said.

A rate cut would not change much in the periphery, and the ECB would "more likely than not wait for another month as it publishes new economic forecasts in June, before deciding whether to cut rates or not," he said.

"But we do expect ECB President Mario Draghi to send more dovish signals" after the upcoming policy meeting at the beginning of May, he concluded.

AFP/mry

The Local (news@thelocal.de)


Don't miss...X
Left Right

Your comments about this article:

The comments below have not been moderated in advance and are not produced by The Local unless clearly stated. Readers are responsible for the content of their own comments. Comments that breach our terms and conditions will be removed.

Your German Career
Germany's Federal Employment Agency has identified the job sectors the country is most short of workers for. JobTalk looks at where the vacancies lie.
Students at German universities have shown themselves to be a risk-free lot in a survey by Ernst & Young. The civil service is their most popular choice of future profession, while job security is valued above all else.
Jenny Core, originally from Bolton, England, shares her tips in this week’s My German Career on being an artist in Berlin. The 27-year-old exhibits her work regularly in the city, including next to a Turner Prize shortlister.
In this week's JobTalk, Tanya Schober, who is originally from India, talks us through her journey to German citizenship.
In this week's My German Career, Anupama Gopalakrishna, who is originally from Bangalore in India, tells The Local about her new life in Frankfurt.
In this week's My German Career, US pastor Jeff Ingram, 54, talks about life in the church and the advantages as well as the downside of Germany's desire for order.
German Employment News
Despite the ease of work visa regulations for non-EU citizens with certain job qualifications, few potential immigrants are taking advantage.
Stress at work is resulting in more German employees than ever before stopping work before they reach retirement age, a new study shows. So what are the main triggers to watch out for?
The labour minister of Germany’s most-populous state has called for an “anti-stress law” to be introduced to stop people being contacted by their bosses out of office hours.
The first email in Germany was sent 30 years ago on Friday and today 62 percent of people in Germany receive at least 20 emails a day. But rules over receiving and sending emails outside of work hours in Germany are still not clear-cut.
Foreigners from outside the EU suffer from a much lower employment rate in Germany than native citizens and EU immigrants, a study confirmed on Wednesday.
A new YouGov survey shows job seekers in Germany are exasperated with the application process, complaining about poor job adverts and slow responses. Recruiters agree.

Assistant for distribution process management
You will be working in conjunction with our wholesale retailer partners and will be responsible for managing and distribution process of various consumer products. As an effective assistant for distribution process management you will organize product delivery to domestic and international customers, ensure that our clients will receive excellent service experience that we are known for.
FULL JOB AD »

GE Healthcare
DEU-Lower Saxony-Bremen, Oldenburg-42655
Stepstone
Added 08/20/14

Zalando AG
Berlin
Stepstone
Added 08/20/14

StepStone Deutschland GmbH
Brüssel, Berlin, Düsseldorf, Warschau
Stepstone
Added 08/20/14

Zalando SE
Berlin
Stepstone
Added 08/20/14

Drägerwerk AG & Co. KGaA
Lübeck
Stepstone
Added 08/20/14

Microsoft Deutschland GmbH
München
Stepstone
Added 08/20/14

Celesio AG
Stuttgart
Stepstone
Added 08/20/14

GE Energy Management
DEU-Bavaria-Augsburg-86159
Stepstone
Added 08/20/14

Experteer
bawu
Careerbuilder
Added 08/20/14

NonStop Recruitment Ltd
hesse
Careerbuilder
Added 08/20/14