Mar MNI analysts survey Feb Jan
median range
————————————————————————
Business sentiment: 109.8 109.5 108.2 – 110.7 109.7 108.4
Current conditions 117.4 117.0 116.3 – 118.3 117.4 116.3
Six-month outlook: 102.7 102.9 101.5 – 104.0 102.4 100.9
—

FRANKFURT (MNI) – German business morale surprised to the upside in
March, extending its run of increases to five months on a more positive
view of the near-term outlook, the Ifo institute reported on Monday.

Taking into account modest upward revisions in both February and
January, further improvement in March brought the Ifo headline figure to
109.8, its highest level since last July. Still, the gain this month was
the smallest in nearly a year.

“The German economy is losing some of its momentum,” Ifo President
Hans-Werner Sinn said in a press release.

Current conditions unexpectedly stabilized in March at a five-month
high of 117.4. While weaker than forecast, expectations maintained their
upward trend, gaining 0.3 point to 102.7, the best result since July.

Sentiment within the manufacturing sector fell 0.3 point to 14.0 in
March following two months of growth, as a downward revision in the
current business situation offset a more favourable forward outlook.
Respondents said they planned to increase staffing further, though by
less than last month. Businesses also reported favourable impulses from
foreign demand.

Construction morale also lost some ground, slipping one full point
to 2.3 on the back of a downward revision in the six-month outlook.
Still, the indicator remains above zero, pointing to overall optimism in
the sector.

After hitting a seven-month high in February, morale among
wholesalers slipped 2.2 points to 12.8 in March, with both the current
situation and expectations falling.

Conversely, retailers were more optimistic this month, citing
improvements in their current situation and a brighter six-month
horizon.

In services, morale fell back half a point to 22.4 in March, due
mainly to a weaker current conditions assessment. However, while
respondents also revised down their expectations for the next six
months, they still looked to add to staff, Ifo reported.

The further improvement in the Ifo business climate is reassuring
after the unexpected setback in the March manufacturing PMI (48.1),
which slipped into contraction territory for the first time since late
last year, as companies pointed to fewer new orders, lighter workloads
and reductions in staff.

The decline in the services PMI (51.8) was less severe, though
still pointed to moderating business activity, only a modest rise in new
work, and the slowest pace in employment growth since early 2010.

Growth “will not be as positive” this year as in 2011, Finance
Minister Wolfgang Schaeuble said a week ago, noting that the economy is
“very vulnerable” to global trends.

The Bundesbank expects average GDP growth of 0.6% this year after
3.1% last year. Yet despite a less favorable environment, the economy is
in “remarkably good shape,” President Jens Weidmann said last week.

In its latest monthly bulletin, the central bank suggested that
unseasonably cold temperatures likely weighed on economic activity last
month, and it pointed to an expected recovery in the spring.

— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —

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