German Ifo Business Confidence Improves More Than Expected

Germany’s business confidence strengthened more-than-expected in February as the manufacturing activity remained robust despite the lockdown, survey results from ifo Institute revealed on Monday.

The business confidence index rose to 92.4 from revised 90.3 in the previous month. This was better than the economists’ forecast of 90.5.

The increase in the Ifo Business Climate Index in February suggests that the German economy is weathering the lockdown better than anticipated, Andrew Kenningham, an economist at Capital Economics, said.

The largest euro area economy is likely to regain its pre-pandemic level in early 2022, well ahead of the other major euro-zone economies, the economist added.

Assessments of the current business situation were more positive. Moreover, pessimism regarding the coming months was markedly reduced in February.

The current conditions indicator came in at 90.6 in February, up from 89.2 the previous month and above economists’ forecast of 89.0.

The business expectations indicator improved to 94.2 from 91.5 a month ago. Economists had forecast the score to rise moderately to 91.8.

In manufacturing, the business climate index jumped to its highest value since November 2018. Assessments of the current situation improved and companies were notably more optimistic about the coming months.

Business confidence in the service sector also improved in February. Service providers were more satisfied with their current situation and their business expectations were less pessimistic.

In trade, the business climate index rose a little following last month’s slump. Expectations were still pessimistic, but not to the same degree as last month. On the other hand, companies’ assessments of their current situation were worse.

The business climate improved in construction due to less pessimistic expectations in February.

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