The Ifo Business Climate Index for Industry and Trade in Germany has risen slightly in January.

The companies have assessed their current situation marginally less positively than in December. With regard to the outlook for the coming six months, they are more optimistic. On the whole, the condition of firms in German industry and trade continues to be robust.

The ECB last month forecast that the Eurozone economy will grow about 2% this year. Siemens AG, Europe's biggest industrial company, said today fiscal first- quarter sales rose 10% to €18.4 billion.

In manufacturing the business climate indicator has risen somewhat. The current situation has been assessed just as favourably as in December. Confidence in the six-month outlook has increased slightly, and the survey participants are nearly just as optimistic with regard to future export business as in December. The share of firms that plan to hire additional staff has fallen somewhat, however.

The business climate in the construction industry has brightened. Dissatisfaction with the current business situation has weakened marginally, but the contractors are clearly more confident regarding future business development. The business climate in wholesaling remains unchanged. Current business has been assessed somewhat more positively than in December, but the six-month outlook has worsened. In retailing the index has fallen again as a result of more unfavourable assessments of the current situation. However, the firms are less sceptical with regard to the six-month outlook than in December.

The Ifo Business Climate Index is based on ca. 7,000 monthly survey responses of firms in manufacturing, construction, wholesaling and retailing. The firms are asked to give their assessments of the current business situation and their expectations for the next six months. They can characterise their situation as “good”, “satisfactorily” or “poor” and their business expectations for the next six months as “more favourable”, “unchanged” or “more unfavourable”. The balance value of the current business situation is the difference of the percentages of the responses “good” and “poor”; the balance value of the expectations is the difference of the percentages of the responses “more favourable” and “more unfavourable”. Thebusiness climate is a transformed mean of the balances of the business situation and the expectations. For calculating the index values the transformed balances are all normalised to the average of the year.

The Ifo Business Climate indicator for the German service sector has risen again in January.

Although the companies have assessed their current business situation less favourably than in December, they are clearly more confident regarding the coming six months. The plans of the survey participants indicate that staff levels could rise again.