EU Economy
German business confidence began 2014 at highest level in more than two years
By Finfacts Team
Jan 27, 2014 - 2:46 PM

German business confidence began 2014 at the highest level in more than two years in a indication that the recovery in Europe’s largest economy may be accelerating.

The Ifo institute’s business climate index, based on a survey of 7,000 executives, rose to 110.6 in January from 109.5 in December. It was the third straight increase and the strongest reading since July 2011.

The institute based at the University of Munich said its Business Climate for industry and trade in Germany improved for the third time in succession. Assessments of the current business situation rose to their highest level since June 2012. Expectations regarding future business developments reached their most optimistic level in almost three years. The German economy made a promising start to the New Year.

The business climate index in manufacturing continued to rise. Manufacturers assessed their current business situation far more favourably. Optimism about future business developments increased significantly, partly due to better export expectations. Capacity utilisation rates rose slightly by 0.2 percentage points.

The business climate index in wholesaling increased significantly. Wholesalers were far more satisfied with their current business situation. Optimism regarding the business outlook also rose to a two year high. In retailing, by contrast, the index fell slightly primarily due to downward revisions of assessments of the current business situation. Retailers, however, were somewhat more optimistic about future business developments.

The business climate index in construction continued to rise. Although contractors assessed their current business situation as slightly poorer than last month, expectations improved considerably and reached an even higher level than during the same period last year.

The Ifo Business Climate Indicator for the German service sector continued to rise. Service providers assessed their current business situation somewhat more favourably. They also expressed greater optimism about future business developments and plan to recruit additional staff.

The Ifo Business Survey of the service sector is based on ca. 2,500 monthly survey responses from firms in key segments of the tertiary sector, especially business-oriented segments (excl. distribution, financial services, Leasing, insurance and government). The survey is conducted and calculated in the same way as the Ifo Business Survey of industry and trade. The indicator for the Business Climate in the service sector has not yet been incorporated into the Ifo Business Climate Index for industry and trade.

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