the mood of The companies has improved significantly in October. The Ifo business climate index climbed to the highest level since February 2014. However, a slowdown is on the horizon again.
The Ifo business climate index for industry and trade in Germany rose in October by 1.0 110.5 points. This is mainly due to the business expectations of the surveyed companies have improved compared to the previous month by 1.6 points (September: +4,4). At a high level, the current business situation as unchanged (+0.3 points). Especially in the Manufacturing and construction sectors has brightened the mood.
the Ifo business climate is significantly above the Ten-year average
the increase in The business climate index at a high level after the strong improvement in sentiment in September is remarkable. The Index is now not only about its high values for July and August, he is also at the highest level since February 2014. The business climate is a clear growth signal in view of the fact that the Index exceeds its Ten-year average currently striking 4.8 points.
in A friendly mood, is a good prerequisite, but no guarantee for a higher production growth. This is true from our point of view, especially if this is based mainly on improved expectations.
Alexander Krüger, chief economist, Bankhaus LAMPE KG. Previously, he worked at WestLB as an economist with the focal points of Germany, the Euro area, European Central Bank and bond markets.
So, with a view to the hard economic data: The improvement in sentiment this year has, so far, only little in the real data. Order intake in the industry until August only 0.6 percent above its year-on-year average (total of the year 2015: one percent). In the case of the production in the Manufacturing sector, the increase to date is one per cent (2015: 0.5 percent). Because of their good results for August are based on distortions due to the summer holidays, is likely to tend to both indicators in the short term, therefore, already a weakness. Of your good results in the mid-2000s, you probably also in 2016, far away.
We also expect that the good mood will get in the short term scrapes. dull This is especially that the world economy will continue to grow. The persistently high (geo)political tensions and increasing protectionism have their share as well. Thus, the growth of the export economy are already set today’s borders. In this respect, the environment for production should not significantly change for the better. Growth, Yes, but not exuberant, is the solution. For economic growth, this means that it will continue to receive only a moderate wind from the back of the industry.
The publication of the commentary is courtesy of Bankhaus LAMPE KG. The Text has already been published in the framework of an external extension of Bankhaus LAMPE KG.
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