German Ifo Business Confidence Drops Unexpectedly In Jan.
The dark clouds over the German economy have not fully cleared.
- Manufacturing optimism moves higher
- Manager sentiment drops for construction, services
Frankfurt, 27 January 2020 (LS NEWS) – German business confidence declined unexpectedly in January despite strong increases in this month’s surveys of investors and purchasing managers.
Ifo’s headline business climate index dropped to 95.9 to fall short of the 97.0 estimate and last month’s 96.3 reading. The forward-looking expectations component of the index slid to 92.9 to miss the market estimate of 95.0 and December’s upwardly adjusted reading of 93.9.
The assessment of the current environment increased to 99.1 but fell a tenth of a point short of the market estimate.
Jan von Gerich, chief analyst at Nordea Markets, tweeted: “Unfortunately, the German Ifo could not replicate the positive signals from last week's PMIs. The German outlook remains uncertain, but the worst uncertainty still seems to have eased.”
The January purchasing managers’ survey for Germany from IHS Markit released Friday produced a preliminary result of 51.1 for the benchmark composite index, which beat the market estimate. The index for Germany’s troubled manufacturing industry increased to a better-than-expected 45.2.
Ifo reported an increase in respondent confidence in the German manufacturing industry, but the indices for services and construction declined this month.
Managers less optimistic than investors
Germany’s oft-volatile polls of investors soared earlier this month. Last week’s results from the ZEW thinktank’s monthly survey showed a sharp rise in the forward-looking expectations index to its highest level since July 2015.
The Sentix index of investor confidence released earlier this month recorded its third consecutive gain in January, producing its strongest result since May, and the poll’s expectations component hit a two-year high.
“The decline in the Ifo business climate index for January comes as a bit of a surprise, following good news from other surveys recently,” said Andrew Kenningham, chief Europe economist at Capital Economics. “This sounds a warning note for those expecting an impressive rebound in the German growth rate. Indeed, we think the economy will continue to grow at only a very anaemic pace in the first half of this year.”
“This is a big disappointment in light of the otherwise solid PMI data,” said Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomcs.
“Overall, it isn’t unprecedented for the IFO to diverge from the rest of the main surveys, but the difference at the start of 2019 is jarring. We take comfort in the fact that manufacturing sentiment jumped.”
The decline in German business confidence follows last week’s comments from US President Donald Trump about the possibility of further tariffs on EU goods and rising concerns about the coronavirus outbreak in China.
- Manufacturing optimism moves higher
- Manager sentiment drops for construction, services
Frankfurt, 27 January 2020 (LS NEWS) – German business confidence declined unexpectedly in January despite strong increases in this month’s surveys of investors and purchasing managers.
Ifo’s headline business climate index dropped to 95.9 to fall short of the 97.0 estimate and last month’s 96.3 reading. The forward-looking expectations component of the index slid to 92.9 to miss the market estimate of 95.0 and December’s upwardly adjusted reading of 93.9.
The assessment of the current environment increased to 99.1 but fell a tenth of a point short of the market estimate.
Jan von Gerich, chief analyst at Nordea Markets, tweeted: “Unfortunately, the German Ifo could not replicate the positive signals from last week's PMIs. The German outlook remains uncertain, but the worst uncertainty still seems to have eased.”
The January purchasing managers’ survey for Germany from IHS Markit released Friday produced a preliminary result of 51.1 for the benchmark composite index, which beat the market estimate. The index for Germany’s troubled manufacturing industry increased to a better-than-expected 45.2.
Ifo reported an increase in respondent confidence in the German manufacturing industry, but the indices for services and construction declined this month.
Managers less optimistic than investors
Germany’s oft-volatile polls of investors soared earlier this month. Last week’s results from the ZEW thinktank’s monthly survey showed a sharp rise in the forward-looking expectations index to its highest level since July 2015.
The Sentix index of investor confidence released earlier this month recorded its third consecutive gain in January, producing its strongest result since May, and the poll’s expectations component hit a two-year high.
“The decline in the Ifo business climate index for January comes as a bit of a surprise, following good news from other surveys recently,” said Andrew Kenningham, chief Europe economist at Capital Economics. “This sounds a warning note for those expecting an impressive rebound in the German growth rate. Indeed, we think the economy will continue to grow at only a very anaemic pace in the first half of this year.”
“This is a big disappointment in light of the otherwise solid PMI data,” said Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomcs.
“Overall, it isn’t unprecedented for the IFO to diverge from the rest of the main surveys, but the difference at the start of 2019 is jarring. We take comfort in the fact that manufacturing sentiment jumped.”
The decline in German business confidence follows last week’s comments from US President Donald Trump about the possibility of further tariffs on EU goods and rising concerns about the coronavirus outbreak in China.
--- Eric Culp, European Editor
@EricCulpLS