German Business Confidence May Gain for First Time in Six

German business confidence probably climbed for the first time in six months in September after the European Central Bank announced an unlimited bond-purchase program to stem the sovereign debt crisis.

The Ifo institute’s business climate index, based on a survey of 7,000 executives, will rise to 102.5 from 102.3 in August, according to the median forecast of 37 economists in a Bloomberg News survey. That would be the first increase since March. Ifo releases the report at 10 a.m. in Munich today.

ECB President Mario Draghi on Sept. 6 unveiled details of plan to buy government bonds to fight speculation of a currency breakup and regain control of interest rates in the euro area. That’s boosted financial markets and helped to ease concerns about the severity of the economic slowdown. German investor confidence gained for the first time in five months in September and gauges of activity in the manufacturing and service industries rose more than economists forecast.

“The recent developments in Europe have created a positive mood among businesses in Germany,” said Thilo Heidrich, an economist at Deutsche Postbank AG in Bonn. “There is a feeling that progress has been made and that we’ve passed the low point. That gives hope for the months to come.”

Ifo’s measure of executives’ expectations probably rose to 95 from 94.2, while a gauge of the current situation may have slipped to 111 from 111.2, the survey shows.

Slower Growth

Growth in Europe’s largest economy slowed to 0.3 percent in the second quarter from 0.5 percent in the first as export demand from euro-area trading partners waned, prompting companies to postpone investments. Capital investment fell 0.9 percent in the second quarter, with spending on plant and machinery down 2.3 percent.

At least five of the 17 member countries of the euro area are in recession, including Spain and Italy. The European Commission forecasts a 0.3 percent economic contraction for the region as a whole this year.

The German economy will expand 0.6 percent this year compared with 3 percent last year, the Federal Labor Agency’s IAB research institute said last week.

German carmaker Daimler AG (DAI) said on Sept. 20 that operating profit at its Mercedes-Benz unit will fall this year, lowering a previous target of matching the 2011 figure. Porsche AG (PAH3), another German automaker, plans to build fewer than the 155,000 cars and sport-utility vehicles originally planned for next year.

Outside Europe

Still, German exports to faster-growing markets outside Europe and domestic spending are helping to insulate the economy from the debt crisis.

Schaeffler AG, the roller-bearing maker that’s the biggest shareholder in car-parts manufacturer Continental AG, said last month it’s sticking to its forecasts for 2012 after demand from outside Europe helped second-quarter sales to rise.

“The order situation for German companies has been getting worse in the past months,” said Ulrike Rondorf, an economist at Commerzbank AG in Frankfurt. “However, the risks coming from the debt crisis in Europe are smaller now and that’s why there is kind of a mixed feeling among German businesses.”

To contact the reporter on this story: Stefan Riecher in Frankfurt at sriecher@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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