— Adds Results for Sectors

Jan MNI analysts survey Dec Nov
median range
————————————————————————
Business sentiment: 108.3 107.6 106.2 – 108.4 107.3 106.7
Current conditions 116.3 116.8 98.0 – 117.7 116.7 116.7
Six-month outlook: 100.9 99.3 98.0 – 115.0 98.6 97.6
—

FRANKFURT (MNI) – Optimism among German businesses grew for the
third consecutive month in January, overshooting most forecasts to
reach a five-month high, as brightening near-term prospects offset a
modest decline in the current situation, the Ifo institute reported on
Wednesday.

Further improvement in January lifted the business climate
indicator to 108.3, beating all but the most optimistic forecasts. A
majority of analysts had projected only a modest rise in sentiment this
month.

“The German economy has started the year positively,” Ifo President
Hans-Werner Sinn said in a press release.

After stabilizing in December, the current conditions component
slipped 0.4 point to 116.3, its lowest point since October 2010.
Conversely, expectations continued trending upwards, reaching 100.9, a
six-month high.

In manufacturing, sentiment shot up 4.5 points to 13.4, its best
result since August, on the back of a business outlook “clearly more
favourable than in the previous month,” Ifo’s Sinn said. “Export
expectations and personnel planning are also somewhat more positive once
again.”

Morale in the construction sector gained 2.6 points to a six-month
high of -3.7 in January, as improvement in the business outlook
outweighed the decline in optimism regarding the current situation.

Following two months of increases, sentiment in the wholesaling
sector fell back 0.7 point to 10.5, with respondents viewing the current
situation less favourably than last month, but feeling more confident
about the near term.

In retailing, respondents revised down their view of the current
situation, while growing more skeptical regarding the coming months. As
a result, the overall business climate plunged 6.1 points to -0.5.

Boosted by further improvement in the near-term outlook, service
sector morale rose 2.7 points to 22.3.

“There was, however, a slight drop in the number of service
providers that assessed their current business situation as favourable,”
Sinn said, though noting that firms were increasingly looking to
increase personnel.

While German economic activity likely lost some ground over the
last three months of 2011, the five-month high in the January
manufacturing PMI (50.9) and the seven-month high in services (54.5)
suggest that the Eurozone’s largest economy started 2012 on better
footing.

Still, any sustained forward momentum may well be limited. The PMI
survey pointed to ongoing declines in new business, with manufacturing
export orders falling for the seventh consecutive month.

Although morale among investors hit a six-month high in January,
the ZEW’s barometer also suggests that Germany may not be entirely out
of the woods yet. A majority of respondents still expect things to
worsen over the next six months, leaving the headline figure more than
45 points below its historical average.

The Bundesbank does not foresee a pick-up in growth in the first
quarter of this year, the central bank said in its monthly bulletin on
Monday. Bundesbank President Jens Weidmann said he expected the economic
upswing to resume over the course of the year, provided there is no
aggravation of the Eurozone debt crisis. The central bank has forecast
full-year GDP growth of 0.6%.

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

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