Nov MNI analysts survey Oct Sep
median range
————————————————————————
Business sentiment: 106.6 105.0 104.0 – 105.7 106.4 107.4
Current conditions 116.7 115.3 114.2 – 116.0 116.7 117.9
Six-month outlook: 97.3 95.8 95.0 – 96.2 97.0 97.9
—

FRANKFURT (MNI) – Returning optimism in Germany’s six-month outlook
and a stable view of current conditions unexpectedly lifted German
business morale in November following four consecutive months of
decline, the Ifo institute reported on Thursday.

As a result, the sentiment indicator recovered modestly to 106.6
this month after slipping to a 15-month low in October. All analysts
surveyed had forecast a further erosion in confidence.

Current conditions held firm at 106.4 this month after a downward
trend had begun in July.

“The current business situation, according to the survey responses,
remains positive,” Ifo President Hans-Werner Sinn said in a press
release. “The German economy is still performing relatively well despite
the international turmoil.”

Due to “somewhat less sceptical business expectations”, companies’
six-month outlook improved to 97.3 in November from October’s 97.0
level.

German GDP growth picked up speed in the third quarter of this year
to +0.5% on the back of recovering private consumption and stronger
investment. With lower inflation expectations likely to favor household
spending moving forward and external demand still supporting exports,
the economy appears on track to achieve 3% growth this year.

However, recent indicators suggest that the Eurozone’s largest
economy could stagnate going into 2012 and possibly contract, albeit
mildly.

Markit Economics’ latest composite PMI for Germany held firm at a
27-month low in November, as new business across the private sector fell
for the fourth consecutive month.

“The forward-looking elements of the survey are still flashing red
about a slide back into recession, even if the latest output figures
probably suggest the risk of an imminent contraction of the German
economy has receded a notch,” said Markit Senior Economist Tim Moore.

Wanning investor confidence brought the ZEW’s sentiment indicator
down for the ninth consecutive month in November. Noting the
deterioration in global trade and debt problems both in the Eurozone and
the U.S., ZEW President Wolfgang Franz warned that Germany’s economic
outlook could suffer if developments worsen.

Earlier this week, the Bundesbank warned that the German economy
would encounter headwinds in the coming months and projected GDP growth
at 0.5% to 1.0% next year.

The European Commission also expects difficulties for the German
economy in 2012. “Next year, the external climate will start to weaken
economic prospects in Germany – not least from the euro area, which
accounts for 40% of German exports,” Monetary Affairs Commissioner Olli
Rehn said on Tuesday. “We project growth to be only 0.8% next year.”

— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —

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