German Economy has Shifted into Higher Gear

April 26, 2010 · Filed Under Markets

The Ifo Business Climate for industry and trade in Germany improved again strongly in April. Firms are considerably more satisfied with their current business situation than before.

According to Hans-Werner Sinn, President at the ifo Institute for Economic Research, the business situation has strongly improved for the second month in succession. Also with regard to the outlook for the coming six months, the surveyed firms are again more upbeat than before. “The German economy has shifted into a higher gear,” says Ifo.

In manufacturing the business climate index has risen once more. Manufacturing firms have again given more favourable assessments of their business situation. With regard to their business expectations for the coming 6 months they are also more hopeful than last month. They see better opportunities for exports, too. Currently, firms are utilising their equipment and machines at a clearly stronger rate than at the beginning of the year. The capacity utilisation rate in industry is now somewhat below the long-term average. Company plans to reduce personnel have become rarer.

The business climate has further brightened in retailing as well as wholesaling. In both distribution sectors firms consider their current situation as more positive than before. The six-month outlook is viewed less critically.

In construction the business climate index has fallen slightly after having risen four times in a row. The current business situation is assessed by building contractors as clearly more favourable than in the previous month. However, they are not quite as optimistic as in March about the development of business in the coming six months.