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German March Ifo Business Sentiment At 8-Month High

German March Ifo Business Sentiment At 8-Month High
3/26/2012 6:50 AM ET

German business confidence unexpectedly improved for a fifth month in March, a closely watched survey showed Monday. Nonetheless, March's meager 0.1 point improvement indicates that the economy is losing some of its momentum.

Business confidence rose to 109.8 in March, the highest since July 2011, from the revised 109.7 level a month ago, survey data from the Munich-based Ifo institute revealed Monday. The index stayed above the expected reading of 109.5.

The slight increase in the headline index suggests that the run of optimism regarding the German economy might be coming to an end, Jennifer McKeown at Capital Economics said. The economist suspects that the economy will do little more than stagnate this year.

However, IHS Global Insight Senior German Economist Timo Klein said the odds that the German economy will strengthen continually during the course of 2012 remain quite high.

The survey showed that the current conditions index remained unchanged at 117.4 in March, while it was forecast to fall to 117.

Meanwhile, the expectations index rose to 102.7 from 102.4 in February. The reading matched economists' expectations.

Manufacturers viewed the current business situation less positively, but assessed their business outlook more favorably. They still plan to raise their staff numbers, but less strongly than in the previous month.

Business climate improved sharply in retailing. Retailers reported a clearly improved business situation and were more optimistic about their six-month outlook. Wholesalers' expectations deteriorated only minimally, while they were less satisfied with their current business situation.

Constructors reported a somewhat more favorable business situation in March. However, they were less optimistic about their six-month business outlook.

The business climate for the service sector deteriorated in March. The downturn was mainly due to much less positive assessments of the current business situation. The service providers surveyed no longer assess their six-month business outlook as favorably as in February.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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