German business sentiment up for 8th straight month in November, according to Ifo survey

German business optimism rises again in November

FRANKFURT — German business confidence rose for an eighth consecutive month in November as Europe’s biggest economy recovered steadily from its worst recession in decades, a leading survey showed Tuesday.

The Ifo business climate index rose to 93.9 points in November from 92 points the month before, beating analysts’ expectations.

“The firms are again not quite so dissatisfied with their current business situation,” Ifo president Hans-Werner Sinn said in a statement. “Also, their view of the business outlook in the coming six months is more favorable than in October.”

The Munich-based group said the climate for industry and trade clearly improved in November, while manufacturing, wholesale and retail also both posted improvements in their current business expectations readings. However, the construction industry saw a decline in sentiment.

“The Ifo business climate index rose stronger than expected,” Alexander Koch, a UniCredit economist, said in a research note. Experts had predicted a rise to 92.5, while UniCredit was looking for a 92.8 reading, Koch said.

“Business expectations and new orders continue to point clearly north, arguing against an abrupt end of the current solid economic rebound, which started from very depressed levels.”

Koch said that while he doesn’t see much room for a further acceleration in growth, “the momentum in the inventory cycle and the improvement of global trade provide enough tail wind for the coming months.”

The Ifo index is based around 7,000 monthly survey responses from firms in manufacturing, construction, wholesaling and retailing.

They assessed their current situation in November better than the previous month, with the index rising to 89.1 from 87.4. Expectations for the next six months rose to 98.9 from 96.8.

Sinn said manufacturers were more positive about their export opportunities and that they are less inclined to cut staff than before.

Retailers appraised their current business environment “somewhat more favorably,” Sinn said, while the wholesaling business situation was largely unchanged in November.

In construction, “although the firms have assessed their current business situation similarly as in October, they have expressed much more reserve regarding their business outlook,” Sinn said. That led to an overall drop in the business climate index reading.

Separately Tuesday, the Federal Statistical Office confirmed German gross domestic product rose 0.7 percent in the third quarter compared with the previous quarter — the second rise in a row. Economic output rose 0.4 percent in the second quarter, when Germany technically emerged from recession.

“Overall, the steady improvement of leading indicators such as Ifo and purchasing managers’ indexes that began around March suggests that the current economic recovery is reasonably underpinned,” said IHS Global Economist Timo Klein.

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