German economy is 'in party mood'

The overall business climate in Germany has improved dramatically in the last month as industry and trade sectors reported strong performances and a positive outlook for the rest of 2010, according to the latest Ifo survey.

The Munich-based research institute’s president, Hans-Werner Sinn, says the sharp improvement in July's survey results compared to the previous month, is the largest since German reunification in 1990.

‘The German economy is in a party mood,’ says Sinn. ‘In manufacturing the business climate has brightened strongly. The business situation of the manufacturing firms has clearly improved.

‘Moreover, the survey participants are now more optimistic with regard to the six-month business outlook. With regard to exports the firms see similarly favourable opportunities as in June.

Available machinery and equipment is being utilised more strongly than in the spring. Capacity utilisation is now only slightly below the long-term average. Firms’ employment plans are more favourable and point towards slight increases in staff levels.

The report also shows that in wholesaling, retailing and construction the business climate has brightened.

‘An increasing number of wholesalers and retailers have assessed the current business situation as good,’ says Sinn. ‘The business expectations of the survey participants for the coming six months are now more positive in both distribution sectors.

‘The survey participants in construction have appraised the business situation considerably more favourably than in the previous month. Their six-month business outlook is slightly less confident than in June.’