Survey shows unexpected increase in German business confidence despite market plunges in China



We also have more stories about:
(click the phrases to see a list)

Subjects:

Places:

 


FRANKFURT, Germany — German companies shrugged off concerns about China's economy and turmoil in Greece, a key survey showed. The result, however, likely did not yet reflect the latest plunges in Chinese and global stock markets.

The closely watched Ifo institute index of business sentiment in Europe's largest economy rose unexpectedly to 108.3 points for August from 108 in July, Ifo said Tuesday. Analysts had predicted a slight decrease to 107.6 points.

Companies' outlook for the coming months fell, but only slightly.

The bulk of the responses came in the first two weeks of August, a period which included China's surprise devaluation of its currency on Aug. 11 — but which preceded the dizzying stock market plunges Friday and Monday.

The upbeat result comes amid uncertainty about slowing economic growth in China. The world's second-largest economy is a major market for German companies, but worries over a slowdown there were not widely felt in the survey, even though exports have already slowed somewhat. Recent figures show that German's economy, Europe's largest, is increasingly supported by domestic consumer spending as well as exports.

Analysts cautioned that the Ifo survey may not yet fully reflect all the turmoil.

Still, there are reasons to argue that a China slowdown will not derail Germany's economy.

"German companies remain unimpressed by the current series of uncertainties and turmoil," wrote analyst Carsten Brzeski in an email to investors.

Brzeski said that a slowdown in China's high economic growth rates was not the same as drop in output.

He noted that German exports to China have already slowed in the first half of the year, without derailing the German recovery.

"The geographical diversification of German exporters should cushion any further weakening of Chinese demand," he said. "As long as other major export markets like the U.S., the U.K., Eastern Europe and the eurozone are continuing to grow or at least avoid a new slowdown, German exports should remain solid."

German companies have also looked past troubles in Greece, which agreed with eurozone creditors last week on a third bailout to rescue the government's finances.

The Ifo index is considered an early indicator for Germany's economy. Each month some 7,000 companies are asked for their assessment of the current economic situation and their outlook for the coming months.

Separately, Germany announced a budget surplus of 21.1 billion euros ($24.26 billion) in the first half of the year on healthy tax revenue and a windfall from the sale of cellphone frequencies.

All content copyright ©2015 Daily Reporter, a division of Home News Enterprises unless otherwise noted.
All rights reserved. Click here to read our privacy policy.
Daily Reporter • 22 W. New Road • Greenfield, IN 46140 • (317) 462-5528