The signs are not good for the German economy. Now an important indicator is pointing upwards again after almost half a year.
The mood in the German economy improved again in October for the first time in almost half a year. The Ifo business climate rose by 1.1 points to 86.5 points, as the Ifo Institute in Munich announced. The improvement in sentiment came after a series of four falls in a row, with the Ifo business climate reaching its lowest level since the beginning of the year in September. Analysts had expected a recovery. On average, they had only expected a slight increase in the sentiment indicator to 85.6 points.
“The German economy was able to stop the decline for the time being,” commented Ifo President Clemens Fuest. The approximately 9,000 companies surveyed by the Ifo Institute were more satisfied with their current situation. Expectations also brightened. However, expectations remained characterized by skepticism, Fuest said.
The survey also showed that there is still a “central problem” when it comes to incoming orders from industrial companies. Capacity utilization has also fallen and is well below the long-term average, the statement continues. The research institute also identified a dampening of sentiment in the construction industry. The reason for this was more pessimistic expectations from construction companies.
Better mood in services
However, the Ifo Institute found a better mood in the service sector, where companies were noticeably more satisfied with the current situation. The mood has improved, particularly in the logistics sector as well as in the tourism and IT sectors.
Ulrich Kater, chief economist at Dekabank, sees the survey as evidence that the economy is bottoming out. But nothing more. There is still “hardly any movement in the murky swamp of the German economy”.
Commerzbank chief economist Jörg Krämer said that the recovery in the Ifo business climate speaks against a deep recession. “The more likely scenario remains stagnation in the winter months, followed by an anemic recovery from spring onwards,” said Krämer.
Source: Stern
