The Ifo Institute’s business climate index rose to 101.4 points this month, up from the 100 seen in October and its first gain in eight months. Economists polled by Bloomberg News had predicted a fall to 99.5 points.
Tobias Blattner, an economist at Daiwa International, told the newswire: “Even though we’re expecting the economy to shrink in the fourth quarter, conditions should improve in the new year. It’s going to be a dip in growth rather than a recession in Germany.”
Preliminary figures published last week by Eurostat, the European Union’s statistical office, showed the German economy expanded by a better-than-expected 0.2% during the third quarter, despite the eurozone as a whole falling back into recession.
Data released today by the Federal Statistics Office showed that exports and private consumption were the driving factors keeping the economy growing over the three-month period. But gross capital investment made no contribution to growth as businesses invested less in machines and other equipment.
The Ifo Institute’s latest figures suggest business sentiment has improved since the end of the third quarter and raise hope that capital investment will be able to make a stronger contribution to growth.
However, Capital Economics chief European economist Jonathan Loynes warned against reading too much in the index’s improvement.
“The unexpected rise in November’s German Ifo survey provides some relief, but doesn’t alter the big picture of near-stagnation in the eurozone’s ‘growth engine’,” he said. “The rise in the overall business climate indicator from 100 to 101.4 merely reversed the fall seen in the previous month, hence leaving it at its second lowest level since Feb 2010.”
