German Business Confidence Rises - Or Is It Just a Blip on the Graph?

29 November 2007

MUNICH: The respected German economic research specialist Ifo Institute reports an unexpected increase in business confidence in November, bucking a falling trend and posting the cheeriest data since April.

Its business climate index rose slightly to 104.2 from 103.9 in October, after slipping for six straight months. According to Dow Jones Newswires, economists had expected another decline to 103.4.

Whether or not this is merely a blip on a southbound graph remains to be seen. Says Ifo president Hans-Werner Sinn: "The results indicate that the currently strong economy is only gradually cooling."

Although responding companies assessed their current situation more positively than in October, they were "somewhat more cautious" regarding the six-month business outlook.

But lest folk think him a cockeyed optimist, Sinn switched to melancholy mode: "Economic confidence continues to soften and growth momentum is slowing," he warned.

"The financial market crisis is far from over, the credit crunch is hitting home hard, oil prices remain high and the strong euro continues to hurt business confidence."

Data sourced from International Herald-Tribune; additional content by WARC staff