Survey finds business morale in Germany improves

Germany’s manufacturing industry has shrunk at quickest rate in more than 6½ years

A BMW factory in Leipzig. Business morale in Germany has risen

A BMW factory in Leipzig. Business morale in Germany has risen


Business confidence in Germany has improved more than expected, said a Munich-based research group, as the first increase after six declines lifted the euro slightly, indicating some resilience in the euro zone’s largest economy.

The Ifo Institute’s measure showing sentiment among Germany’s business leaders came in on Monday at a better than expected 99.6 points for March. Analysts in a Factset poll forecast the index at 98.5. February’s figure was revised to 98.7 from 98.5, the lowest level since December 2014.

The euro was recently 0.07 per cent higher at $1.1320 in Monday trading. German Bund yields rebounded back above zero.

The Xetra Dax 30 moved up off session lows and back to the flatline after the data helped dispel fears of recession. The index was steady at 11,359 having been down to 11,312 before it came out.

“The companies are somewhat more satisfied with their current business situation, and they are decidedly more optimistic regarding business in the coming six months,” Ifo said.

The institute’s gauge for the current assessment of German business was 103.8, compared with a forecast 103.0, according to a Factset poll. February was 103.6 while a year ago it was at 106.6.

Expectations for March were at 95.6, compared with 94.0 in February and 100.3 a year ago.

In manufacturing the business climate weakened once again as manufacturers were less positive, the institute said.

Economic data

This month has revealed a flurry of less than positive economic data for Europe’s economic powerhouse, which avoided recession in the second half of last year by a whisker. Ifo this month cut its 2019 economic growth rate estimate for the euro zone’s largest economy from 1.1 per cent to 0.6 per cent. The country’s economy expanded 1.5 per cent in 2018, the slowest since 2013, official data show. Germany’s council of economic experts meanwhile have lowered their growth forecast for 2019 to 0.8 per cent from 1.5 per cent.

Germany’s manufacturing industry has shrunk at the quickest rate in more than 6½ years, the IHS Market purchasing managers’ index for the factory sector showed on Friday. This report came days after the country’s statistics office pointed to a sharp drop in industrial production in January.

– Copyright The Financial Times Limited 2019