German business confidence stays strong ahead of election

FRANKFURT - Agence France-Presse

German business morale dipped slightly in August but stayed close to last month’s all-time high, a closely-watched survey said on Aug. 25, adding to a run of good news for Europe’s powerhouse economy ahead of a general election.

The Munich-based Ifo institute said its business confidence index fell to 115.9 points this month after reaching an all-time peak of 116 points in July.

The result, based on a survey of 7,000 companies, was better than expected as analysts surveyed by Factset had forecast a steeper decline at 115.7 points.

“Sentiment among German businesses remains very strong,” Ifo president Clemens Fuest in a statement. “Germany’s economy remains on track for growth.”
   
Ifo said the dip was down to business leaders’ slightly less positive assessments of the current situation, while their outlook for the future brightened.

The upbeat sentiment adds to a string of positive data for Europe’s top economy, bolstering Chancellor Angela Merkel’s conservatives ahead of the September 24 vote.

The latest survey confirmed “the almost breathtaking strength of the German economy,” said analyst Carsten Brzeski of ING Diba bank.  
   
“Unless German businesses are living in a kind of never-never land, today’s Ifo index sends a clear signal that the German economy is powering ahead. What might look boring from the outside is clearly enjoyable from the inside.”   

Looking to different sectors in the economy, optimism in manufacturing and construction reached new records, although wholesalers became slightly more negative.

The biggest cloud on the horizon came from retailers, who were “clearly less satisfied” with their current situation and less optimistic about the future.

“Car dealers were largely responsible for the downswing,” Fuest said.