German Business Confidence Holds at Highest Level Since 2014

  • Ifo business climate index unchanged at revised 110.4
  • Gauges for current situation improved, expectations worsened

German business sentiment held at the highest level in more than two years in November, signaling that the recovery in Europe’s largest economy remains on track.

The Munich-based Ifo institute’s business climate index stayed at 110.4, unchanged from a revised reading for October. That’s the strongest since April 2014 and compares with a median estimate in a Bloomberg survey of economists of 110.5.

The report adds to signs that Germany’s economy is gathering pace after a slowdown in the third quarter. That chimes with the Bundesbank’s view that growth has been strengthening “considerably” in the last three months of the year, driven by industrial output and consumption amid record-low unemployment.

A separate report published Thursday showed German government spending last quarter climbed 1 percent and private consumption rose 0.4 percent, while exports contracted 0.4 percent. Capital investment stagnated as spending on machinery fell. Gross domestic product rose by a seasonally-adjusted 0.2 percent in the three months through September, in line with a Nov. 15 estimate and the weakest pace in a year.

Ifo’s measure of current economic conditions rose to 115.6 from a revised 115.1, according to the report. A gauge of expectations deteriorated to 105.5 from a revised 105.9.

A Purchasing Managers’ Index for manufacturing and services published on Wednesday signaled economic growth held near a 10-month high in November as an acceleration in services activity largely offset a slowdown in manufacturing.

— With assistance by Andre Tartar, Kristian Siedenburg, Alexander Kell, and Stu Metzler

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