BLBG: German Business Confidence May Rise to Highest Since July 2008
By Frances Robinson and Jana Randow
Dec. 18 (Bloomberg) -- German business confidence probably increased to the highest since July 2008 in December, a sign the economic recovery is on track.
The Ifo institute in Munich will say its business climate index, based on a survey of 7,000 executives, rose to 94.5 from 93.9 in November, according to the median of 33 forecasts in a Bloomberg News survey. That would be the highest reading since July 2008. The index reached a 26-year low of 82.2 in March. Ifo releases the report at 10 a.m. today.
Recent reports have painted a mixed picture about Germany’s recovery. While the ZEW institute said four days ago economists are tempering optimism about the outlook, the Bundesbank this month raised its forecast for 2010 growth and Volkswagen AG on Dec. 11 posted the strongest sales gains this year.
“There’s probably further good news to come from Ifo, even if the improvement isn’t as rapid as before,” said Laurent Bilke, a former European Central Bank economist now at Nomura International Plc in London. “Exports are the place where you’ll see the recovery coming from in Germany, even if the very strong euro means they may not benefit as much as they would have done normally.”
Ifo’s gauge of the current situation probably increased to 90 from 89.1 while an index of executives’ expectations may have risen to 99 from 98.9, according to the survey of economists. The institute conducted the survey between Dec. 1 and Dec. 17.
Exporters are helping to fuel Germany’s recovery, overcoming a 14 percent appreciation in the euro since February. Sales at Volkswagen, Europe’s largest carmaker, rose 19 percent in November from a year earlier. Deutsche Bank AG, Germany’s biggest bank, says business in Asia will help push pretax profit to a record 10 billion euros ($14.3 billion) in 2011.
Recovery Doubts
While factory orders and industrial production fell in October, exports rose more than economists forecast.
The end of government stimulus measures and market turmoil stemming from concerns over Greece’s budget health are nevertheless casting doubt on the pace of recovery.
The Bundesbank says German economic growth will slow in the current quarter from the 0.7 percent rate recorded in the third, when expansion was boosted by stimulus spending.
The central bank then expects the economy to grow 1.6 percent in 2010 after a contraction of 4.9 percent in 2009. It previously forecast the economy would stagnate in 2010.
“Exports are still strong, last month’s factory orders and industrial production were disappointing, but it was a temporary blip,” said Aline Schuiling, an economist at Fortis Bank in Amsterdam. “The underlying trend remains well set for exports and the industrial sector.”
To contact the reporter on this story: Jana Randow in Frankfurt at jrandow@bloomberg.netFrances Robinson in Frankfurt at frobinson6@bloomberg.net
