• Germany's news in English

Business confidence rises despite euro fears

The Local · 24 Nov 2011, 11:25

Published: 24 Nov 2011 11:25 GMT+01:00

Facebook Twitter Google+ reddit

Markets soared as the Ifo economic institute's closely watched business sentiment index rose to 106.6 in November, compared to 106.4 in October, the first rise in four months and contrary to analysts' expectations.

"The German economy is still performing relatively well despite the international turmoil," said the president of the institute, Hans-Werner Sinn.

The rise completely wrong-footed analysts surveyed by Dow Jones Newswires, who had predicted a decline to 105.1.

Traders were quick to cheer a rare slice of good news, with the DAX index of leading German shares jumping nearly 50 points and the euro gaining nearly half a cent against the dollar.

The index "improved somewhat in November for the first time in four months. The slight increase is due to somewhat less sceptical business expectations," said Sinn.

"The current business situation, according to the survey responses, remains positive," added the economist.

A weak German bond sale on Wednesday had stoked concerns that the eurozone debt crisis was seeping from the weak countries on the periphery of the bloc to the core, thought until recently to be safe.

Germany suffered the unusual humiliation of very weak demand at an auction for its bonds, until now considered the gold standard for eurozone debt and a safe haven against the crisis.

But analyst Carsten Brzeski from ING bank said that despite the poor bond auction, Germany was still standing up well to the crisis.

After the sale, "some market participants had already welcomed Germany in the debt crisis club," he said.

"The lack of investor's appetite for German government bonds was by some market participants even considered as a vote of no confidence against Germany. Time to put things into perspective," he added.

However, a more bearish analyst, Jonathan Loynes from Capital Economics, believed the index would "do little to ease the growing concerns over the outlook for Germany in the wake of yesterday's unsuccessful Bund auction.

"Overall, with the economy clearly slowing and the government under ever increasing pressure to take on enormous fiscal risk in order to save the euro, market worries about Germany look set to intensify," he said.

Nevertheless, official data released earlier on Thursday showed that gross domestic product rose 0.5 percent in the third quarter, following a 0.3-percent expansion in the second quarter.

Story continues below…

The data confirmed that Germany outperformed its neighbours during the three months ending September 30. However economists see signs of a looming slowdown in the fourth quarter as the eurozone debt crisis takes a toll.

Germany suffered more than most from the last economic slump, with its economy shrinking around five percent in 2009 as demand for its exports dried up.

But as the developing world recovered quickly and began again buying goods "made in Germany", the country staged an impressive comeback, with output growth of 3.7 percent last year.


The Local (news@thelocal.de)

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
These are Germany's top ten universities
The new library of Freiburg University. Photo: Jörgens.mi / Wikimedia Commons

These are the best universities in all of Germany - at least according to one ranking.

Introducing Swabians - 'the Scots of Germany'
Photo: DPA

These Southern Germans have quite a reputation in the rest of the country.

Woman sues dentist over job rejection for headscarf
Photo: DPA

A dentist in Stuttgart is being taken to court by a woman whom he rejected for a job as his assistant on the basis that she wears a Muslim headscarf.

Isis suspect charged with scouting Berlin attack sites
Photo: DPA

German federal prosecutors said Thursday they had brought charges against a 19-year-old Syrian man accused of having scouted targets in Berlin for a potential attack by the Isis terror group.

Berlin Holocaust memorial could not be built now: creator
The Memorial to the Murdered Jews of Europe, in Berlin. Photo: DPA.

The architect of the Berlin Holocaust memorial has said that, if he tried to build the monument again today, it would not be possible due to rising xenophobia and anti-Semitism in Germany and the United States.

'Liberal' Germany stopping Europe's 'slide into barbarism'
Ian Kershaw. Photo: DPA

Europe is not slipping into the same dark tunnel of hate and nationalism that it did in the 1930s - mainly thanks to Germany - one of the continent's leading historians has said.

Eurowings strike to hit 40,000 passengers
Travelers impacted by the strike on Thursday wait at Cologne Bonn airport. Photo: DPA.

The day-long strike by a Eurowings cabin crew union is expected to impact some 40,000 passengers on Thursday as hundreds of flights have been cancelled.

Deutsche Bank reports surprise quarter billion profit
Photo: DPA

Troubled German lender Deutsche Bank reported Thursday a surprise €256-million profit in the third quarter, compared with a loss of more than six billion in the same period last year.

US 'warned Merkel' against Chinese takeover of tech firm
Aixtron HQ. Photo: DPA

The German government withdrew its approval for a Chinese firm to purchase Aixtron, which makes semiconductor equipment, after the US secret services raised security concerns, a German media report said Wednesday.

Long-vanished German car brand joins electric race
Photo: DPA

Cars bearing the stamp of once-defunct manufacturer Borgward will once again roll off an assembly line in north Germany from 2018, the firm said Wednesday.

10 German clichés that foreigners get very wrong
Sponsored Article
Last chance to vote absentee in the US elections
10 ways German completely messes up your English
Germany's 10 most weird and wonderful landmarks
10 things you never knew about socialist East Germany
How Germans fell in love with America's favourite squash
How I ditched London for Berlin and became a published author
12 clever German idioms that'll make you sound like a pro
23 fascinating facts you never knew about Berlin
9 unmissable events to check out in Germany this October
10 things you never knew about German reunification
10 things you're sure to notice after an Oktoberfest visit
Germany's 10 most Instagram-able places
15 pics that prove Germany is absolutely enchanting in autumn
10 German films you have to watch before you die
6 things about Munich that’ll stay with you forever
10 pieces of German slang you'll never learn in class
Ouch! Naked swimmer hospitalized after angler hooks his penis
Six reasons why Berlin is now known as 'the failed city'
15 tell-tale signs you’ll never quite master German
7 American habits that make Germans very, very uncomfortable
Story of a fugitive cow who outwitted police for weeks before capture
jobs available
Toytown Germany
Germany's English-speaking crowd