German Business Confidence Set For Slight Rebound
German industry continues to suffer the effects of the virus crisis.

- Business climate forecast at 78.3 (prev 74.3)

- Expectations set for rise to 74.1 (prev 69.4)

- Current conditions seen edging higher to 80.3 (prev 79.5)

- Data due Monday at 08.00 GMT

 

By Eric Culp

European Editor, LiveSquawk News

@EricCulpLS

 

Frankfurt, 22 May 2020 (LS NEWS) – German business confidence is expected to show a slight increase this month after falling to an all-time low in April when the headline index from the Ifo thinktank recorded its largest one-month decline to date.

 

An economists’ poll predicts a rise in Ifo’s May business climate gauge to 78.3 after last month’s reading of 74.3, the worst showing in the history of the index.

 

This month’s minimal revival in optimism is likely to come mainly from Ifo’s expectations component, one part of the headline index. The market consensus forecasts a rise to 74.1 from the record-low 69.4 performance last month. The current conditions component is expected to nudge higher to 80.2 from 79.5, but some analysts see it falling again, which would mute improvement in the overall number.

 

 

‘Auf wiedersehen’ to a hellish month

 

Ifo said April sentiment at German companies was “catastrophic”, with one economist describing the situation as a “highway to hell”.

 

Thursday’s flash results from the IHS Market’s German purchasing manager’s poll in May were better than expected, with the manufacturing and services components rising sharply. However, both readings and the composite index data point they form remained well below the 50 level, which demarcates growth from contraction.

 

“We expect business and consumer surveys for May to follow the PMIs released this week and bounce back markedly from record lows in April,” said Angel Talavera, head of Europe economics at Oxford Economics. “However, we expect them to remain far below their long-term averages, as the lockdown was still effective during the first half of the month.” German has been lifting many of its restrictions on commerce and the movement of the populace in May.

 

Financial market mavens are already full of hope. Tuesday’s poll results from Germany’s ZEW thinktank showed investor confidence surging to the best mark in more than five years in May, but the mood about the current situation worsened to its lowest level in 18 years.