German Business Climate Improves Unexpectedly

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The FINANCIAL — The mood among German business managers picked up further in September, despite a weakening growth outlook for China and other large developing economies, according to Nasdaq.

The Ifo think-tank said on September 24 its business climate index rose to 108.5 in September from an upwardly revised 108.4 in August. Economists polled by The Wall Street Journal had forecast a decline to 107.9.

“The German economy is proving robust,” said Ifo President Hans-Werner Sinn. Companies were more optimistic about their business outlook and a growing number of manufacturers plan to ramp up production in the months ahead.

But it is too early to tell to what extend the emission scandal at carmaker Volkswagen AG (VOW.XE) will affect other German businesses and industrial firms in particular, Ifo economist Klaus Wohlrabe told the Journal earlier Thursday. Over 80% of the survey’s participants had replied before the weekend of September 19/20.

“If there is an effect, we’ll only find out next month,” Mr. Wohlrabe said.

Ifo’s measure of business managers’ outlook for the coming six months rose to 103.3 in September from 102.2 in August. But firms’ were less positive about their current business situation, with the corresponding index down to 114.0 from 114.8.

Thursday’s Ifo survey points to solid, yet unspectacular economic growth in the second half of the year, economists said.

Germany’s economics ministry said earlier this month that Europe’s largest economy was experiencing a “solid upswing”, but warned that global headwinds are building. “If anything, risks have increased” given the question marks over China’s economy and recessions in Brazil and Russia, it said in its monthly report.

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Every month, the Ifo think tank asks about 7,000 companies in manufacturing, construction, wholesaling and retailing about their business expectations for the next six months and their assessment of the current situation.


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