German business confidence slips

27th September 2004, Comments 0 comments

27 September 2004 , MUNICH - German business confidence slipped slightly in September, a survey of 7,000 executives released Monday showed amid growing uncertainty about the outlook for the global economy. The Munich-based Ifo economic institute said its headline index for German business sentiment fell to 95.2 points in September from 95.3 points in August. The index hit a three-year high of 97.5 in January. But despite the decline in September, Ifo President Hans-Werner Sinn insisted that the survey ind

27 September 2004  

MUNICH - German business confidence slipped slightly in September, a survey of 7,000 executives released Monday showed amid growing uncertainty about the outlook for the global economy.

The Munich-based Ifo economic institute said its headline index for German business sentiment fell to 95.2 points in September from 95.3 points in August.

The index hit a three-year high of 97.5 in January. But despite the decline in September, Ifo President Hans-Werner Sinn insisted that the survey indicated that the pickup in Europe's biggest economy remained on track.

"The survey results point to a continuation of the moderate economic recovery," Sinn said with the decline in September less than analysts had forecast.

Analysts had predicted that the index, which is one of Europes prime economic indicators, would fall to 95.1 points in September.

The fall in the Ifo came against the backdrop of a rebound in energy costs with oil prices edging back towards the key 50 a barrel dollars mark Monday and as a result helping to deepen uncertainty about the global economic outlook.

The September Ifo survey is also likely to set the stage for the release later in the week of subdued business sentiment reports for France and Italy as well as the European Commission.

The Ifo institute said German companies expected a slight weakening in foreign demand, but said their order books had grown and that they planned to cut back on laying off staff.

The release of the Ifo survey followed the publication earlier this month of another a key German sentiment survey which showed investor confidence dropping sharply in September.

Up until now exports have been the key driving force behind Germany emerging from a protracted period of economic stagnation with private consumption in the country still struggling to gain traction largely as a result of continuing high unemployment.

After slumping by 0.1 percent last year, the German economy is forecast to chalk up a modest growth rate this year which falls short of two percent.

Leading the trend down in the September Ifo index were business expectations of the coming months, with the survey's component measuring expectations dropping to 95.7 in September from a revised 95.9 in August.

At the same time, however, the component measuring German industry leaders' assessment of current business conditions rose to 94.8 in September from a reading of 94.7 in August.

"Only in manufacturing was the assessment of the current situation somewhat weaker. In construction, wholesaling and retailing the appraisals of the current situation improved," Sinn said in releasing the Ifo report.

But while exports have also been the prime driving force behind economic growth in the 12-member eurozone, there are signs that consumer demand is picking up in France and Italy - the currency bloc's second and third biggest economies - which could help to stabilise business confidence in the surveys to be released this week.

These are forecast to show France's business climate index dipping to 105.5 in September compared to 106 in August. Business confidence in Italy is also essentially expected to move sideways from 98.3 in August to 98 in September.

That said, however, economists expect growth in both the eurozone and Germany to have slowed during third quarter principally because of the higher energy costs. After coming in at 0.5 percent in the second quarter, third-quarter growth in the 12-member currency bloc is expected to ease slightly.

DPA

Subject: German news


 

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