Germany’s business confidence unpredictably increased from the least in two-and-a-half years in Nov, indicating the largest economy of Europe may recover strength to a good extent.
The IFO institute based in Munich revealed its business climate index, based on a survey of 7,000 executives, which rose to 101.4 this month from 100 in the previous month. The economists forecasted a fall to 99.5, as per the average of 48 predictions in a survey conducted by Bloomberg. The business confidence of France rose from the least in over 3 years this month, according to a separate report.
The growth of Germany slowed lesser than the predictions of economists in the 3rd quarter even as the Euro region crisis continued, and the largest trading partner in the nation, went into recession as the stance for the global economy weakened. German manufacturing slowed down in this month, adding to indications of an economic recession in the 4th quarter, while the recession may not last too long.
The Stoxx Europe 600 Index came down slightly, while the euro gained for a 5th consecutive day, trading at $1.2915.
German Recession
The expectations of Ifo’s measure of executives increased from October’s 93.2 to 95.2 this month, while a measure of the present condition increased to 108.1 from a reworked 107.2.
The growth of Germany slowed down to 0.2% in Q3 from 0.3% in Q2, as confirmed by Federal Statistics Office today. Construction, exports, and household spending were the key contributors to growth, while company investment in machinery and plant and inventories deducted from it.
The consumer confidence in Germany may increase to a 5-year high this month, as per GfK (a market research firm), as increasing wages and joblessness near a 2-decade low prevail over economic concerns. The economy will expand 0.8% in 2012 and 2013, according to the predictions of the European Commission. In contrast, it forecasts a 0.4% contraction in the euro region in 2012 and growth of around 0.1% next year.
Growth Slowdown
London-based Daiwa International’s economist, Tobias Blattner told that though they were anticipating the economy to slowdown in the 4th quarter, situations are likely to improve next year. According to him, it is likely to be a growth dip rather than German recession.
Elsewhere in the Euro region, economies are also indicating few signals of recovery. The business confidence of France rose in this month after Francois Hollande (president) revealed a cut in payroll tax for firms that will come into effect next year. A measure of sentiment amongst factory executives increased from 85 in last month to 88 this month, as stated by national statistics office Insee.