German Business Confidence Index Drops to Lowest Level in More Than a Year
German Business Confidence Falls to Lowest Since June 2010
Wolfgang von Brauchitsch/Bloomberg
An employee inspects steel rolls at a ThyssenKrupp AG steel plant in Duisburg, Germany.
An employee inspects steel rolls at a ThyssenKrupp AG steel plant in Duisburg, Germany. Photographer: Wolfgang von Brauchitsch/Bloomberg
Aug. 24 (Bloomberg) -- Joerg Kraemer, chief economist at Commerzbank AG, discusses the outlook for Germany's economy after business confidence fell to the lowest in more than a year. He speaks from Frankfurt with Maryam Nemazee on Bloomberg Television's "Last Word." (Source: Bloomberg)
Aug. 24 (Bloomberg) -- Kai Carstensen, head of business cycle analyses at the Ifo Institute, talks about German business confidence, which fell to the lowest in more than a year as a global slowdown and Europe’s debt crisis damped the outlook for economic growth. He speaks from Munich with David Tweed on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Aug. 24 (Bloomberg) -- Klaus Baader, an economist at Societe Generale SA, talks about the outlook for the German economy after business confidence fell to the lowest in more than a year. He speaks with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)
German Business Confidence Falls to Lowest in More Than Year
Hannelore Foerster/Bloomberg
Germany’s benchmark DAX Index has plunged almost 25 percent since late July on fears that another global slump will sap demand for the country’s exports, the main driver of its economic expansion.
Germany’s benchmark DAX Index has plunged almost 25 percent since late July on fears that another global slump will sap demand for the country’s exports, the main driver of its economic expansion. Photographer: Hannelore Foerster/Bloomberg
German business confidence fell to the lowest in more than a year as a global slowdown and Europe’s debt crisis damped the outlook for economic growth.
The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, dropped to 108.7 in August from 112.9 in July. That’s the lowest since June 2010. Economists forecast a decline to 111, according to the median prediction of 37 economists in a Bloomberg News survey. The index reached a record high of 115.4 in February.
Germany’s benchmark DAX Index (DAX) has plunged almost 25 percent since late July on fears that another global slump will sap demand for the country’s exports, the main driver of its economic expansion. The debt crisis is also curbing demand within the euro area as governments from Greece to Spain cut spending. German growth slowed to just 0.1 percent in the second quarter from 1.3 percent in the first, the Federal Statistics Office reported on Aug. 16.
“The figures are quite disappointing but they’re no reason to panic,” said Juergen Michels, chief euro-region economist at Citigroup Inc. in London. “The economic recovery in Germany has seen its peak but we won’t see growth stagnating or a recession as order books are full and domestic demand will kick in.”
Ifo’s gauge of the current situation decreased to 118.1 from 121.4, while an index measuring executives’ expectations fell to 100.1 from 105.
Investor Confidence
Investor confidence plunged the most in five years this month, the ZEW Center for European Economic Research in Mannheim said yesterday. It cited fears of a U.S. recession and Europe’s debt crisis.
“What we’ve seen are turbulences worldwide in financial markets and we’ve seen indications that the U.S. business cycle is much weaker than previously thought and of course the German economy is not immune” to that, the Ifo Institute’s Kai Carstensen said in an interview with Bloomberg Television’s David Tweed today.
Growth in the 17-member euro area, Germany’s main export market, slowed to 0.2 percent in the second quarter from 0.8 percent in the first. UniCredit Global Research yesterday cut its growth forecasts for the region. The economy will expand 1.7 percent this year and 1 percent in 2012, UniCredit’s chief euro- zone economist Marco Valli said, paring his estimates from 2.1 percent and 1.7 percent respectively.
Weakened Demand
ThyssenKrupp AG (TKA), Germany’s biggest steelmaker, on Aug. 12 posted fiscal third-quarter earnings that missed analyst estimates as European demand weakened.
Euro area industrial orders unexpectedly fell in June, data published by the European Union’s statistics office today show. Orders slipped 0.7 percent after rising 3.6 percent in May.
The Bundesbank said this week it still expects the German economy to expand about 3 percent this year as unemployment at a two-decade low of 7 percent bolsters household spending. Growth in the country’s manufacturing industry unexpectedly held steady this month, a survey of purchasing managers showed yesterday.
Luxury carmaker Audi AG (NSU) is hiring staff to increase production, including a 57 percent capacity boost for the 69,600-euro ($101,400) A8 flagship sedan, on expectations that the luxury-auto industry will weather the stock-market slump.
“The current level of Ifo’s headline index is indeed a long way above the levels usually consistent with recessions in Germany,” Ken Wattret, chief euro area market economist at BNP Paribas in London said in an e-mailed note.
The euro rose 0.1 percent today to $1.4458 as of 10:24 a.m. in London. Germany’s DAX was up 1.1 percent at 5593.90.
To contact the reporter on this story: Jeff Black in Frankfurt at Jblack25@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
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