Business Climate Brightening Again

January 26, 2010 · Filed Under Markets

The Ifo Business Climate for industry and trade in Germany brightened once again in January. The current business situation of firms has further improved. With regard to the business outlook for the next six months, the surveyed firms are more confident than before. According to ifo, the economic recovery continued at the beginning of this year.

In manufacturing the business climate index has risen noticeably. For the eighth consecutive time, firms assessed their business situation as less unfavourable. Business expectations have also risen. For their export business they anticipate a clear revival. Although the utilisation of machinery and equipment is still below average, the rate is higher than three months ago. The personnel plans of manufacturing firms are still geared to some staff reductions, according to the announcement on 26 January by Hans-Werner Sinn, President of the ifo Institute for Economic Research.

In retail the situation has been reported as nearly unchanged, with retailers somewhat more reserved regarding the six-month outlook than in December. As a result, the business climate in retail remains largely unchanged.

The business climate in wholesale has further improved. Survey participants are again more satisfied with their business situation. They are also less critical regarding business development for the six months to come.

In construction the business climate index has risen strongly. Although the surveyed contractors have given slightly more unfavourable assessments of their current business situation than in December, they are clearly less sceptical regarding business in the near future. Currently, however, many firms are complaining about weather-related constraints on construction activity.