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
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
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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