Tags: EU | Germany | Economy

German Business Confidence Rises in March

Wednesday, 24 Mar 2010 07:45 AM


German business confidence improved in March after falling in February, indicating Europe's largest economy was emerging from the effects of this year's harsh winter weather, a closely watched survey showed Wednesday.

The Munich-based Ifo Institute's business climate index rose to 98.1 points from 95.2 points in February. The survey is viewed by many as a barometer for the economic outlook in Germany, Europe's biggest economy.

"The firms have assessed their current business situation as significantly more favorable," Ifo President Hans Werner Sinn said in the report.

"In addition, their business expectations regarding the coming six months are somewhat more confident than in February. The brightening of the business climate is evident in all surveyed economic sectors," Sinn said.

The survey had fallen for the first time in 10 months in February, with the retail sector especially hurt by record cold and snowfall during the month.

Ifo said manufacturing, construction and wholesaling firms have reported an improvement in the climate of their businesses.

Fewer manufacturers reported they intend to reduce staff levels, while manufacturer outlooks for export remain unchanged from February. The manufacturers reported no change in their outlook for the next six months from February levels.

Germany is the world's second largest exporter, slipping behind China in 2009.

In the construction and retailing sectors, companies regarded their business situation more favorably than in February. Companies are also less skeptical about business in the next six months.

"Today's Ifo confirms that the German economy will leave its winter depression soon," Carsten Brzeski at ING said in a research note.

"The underlying trend of the German recovery remains healthy: business confidence is high, order books are filling, recruitment plans are increasing and even investment prospects are improving. The German 'export machine' is gathering speed again," Brzeski said.

The euro currency fell to levels below $1.34 for the first time since May 2009. Analysts have said a weaker euro can be positive for the 16 countries that use the currency, helping euro zone productivity, as goods such as German cars or machinery become cheaper in markets like the U.S.

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