Ger­man con­fi­dence re­bounds as an­a­lysts warn against hubris

Kuwait Times - - BUSINESS -

Ger­man busi­ness con­fi­dence has hit a two-year high, the Ifo eco­nomic in­sti­tute said yes­ter­day, sug­gest­ing the coun­try had shaken off post-Brexit blues, but an­a­lysts warned of a pos­si­ble slow­down ahead.

The Mu­nich in­sti­tute’s head­line busi­ness con­fi­dence in­dex hit 110.5 points in Oc­to­ber, up one point from the Septem­ber read­ing of 109.5, and the high­est level since April 2014. A plunge in the in­dex over July and August was blamed by ob­servers on Bri­tain’s June 23 vote to quit the EU, but a spring had re­turned to Ger­man busi­nesses’ step by Septem­ber.

“The up­turn in the Ger­man econ­omy is gath­er­ing im­pe­tus,” Ifo pres­i­dent Cle­mens Fuest said in a state­ment. Septem­ber’s sur­prise con­fi­dence re­bound had prompted Fuest to pre­dict a “golden au­tumn” for Europe’s largest econ­omy. In the event, busi­ness peo­ple’s mood in Oc­to­ber beat the fore­casts of an­a­lysts sur­veyed by Fac­tset, who had pre­dicted the in­di­ca­tor would re­main flat. Sub-indexes mea­sur­ing busi­nesses’ opin­ion of the cur­rent eco­nomic sit­u­a­tion and the out­look for the com­ing six months both rose. Ex­pec­ta­tions saw an es­pe­cially strong surge, reach­ing 106.1 points-an in­crease of 1.6 points over Septem­ber’s fig­ure. Both the man­u­fac­tur­ing and con­struc­tion sec­tors were con­fi­dent about the fu­ture, with build­ing firms’ ex­pec­ta­tions hit­ting a new record high. Re­tail­ers’ mood was largely un­changed from Septem­ber, while whole­salers’ view of both the cur­rent cli­mate and the com­ing months dark­ened slightly. Tues­day’s data comes on top of strong Mon­day read­ings in the pur­chas­ing man­agers’ in­dex (PMI) — a sur­vey of ac­tiv­ity in pri­vate com­pa­nies-in Ger­many and the whole eu­ro­zone. On the back of Oc­to­ber’s PMI and com­fort­ing in­dus­trial pro­duc­tion data for August, the Ifo read­ing “sug­gests that the Ger­man econ­omy con­tin­ued to per­form well in the sec­ond half of 2016,” Jen­nifer McKe­own of Cap­i­tal Eco­nom­ics said. But she pointed to a likely slight slow­ing of growth in Europe’s eco­nomic pow­er­house in 2017, as in­fla­tion be­gins to weigh on con­sumer spend­ing.

“Lead­ing in­di­ca­tors have swung back onto an up­wards trend,” agreed Ste­fan Ki­par of Bay­ernLB bank, al­though “it’s too soon to sound the fi­nal all­clear on the econ­omy”. Ki­par pointed to a con­sti­tu­tional ref­er­en­dum in Italy and the US pres­i­den­tial elec­tion in the next two months as “po­ten­tial pit­falls” for con­fi­dence, adding that the true im­pact of Brexit may come when Bri­tain launches its two-year di­vorce ne­go­ti­a­tion pe­riod, ex­pected by the end of March next year. — AFP

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.