| ||
| ||
| ||
 |
|
|
|||||||||||||||||||||||||||||||||||||||||||||
Germany business morale improves
BERLIN, Oct 28 (Reuters) -- German business confidence rose for the sixth month in a row in October, putting Europe's largest economy on course for a moderate upswing next year, the influential Ifo economics research institute said on Tuesday. Ifo's highest reading in two-and-a-half years coincided with better business morale in fellow euro zone countries Belgium and the Netherlands, although Italian business confidence slipped despite expectations of a rise. Analysts pointed to hopes for improved export prospects as the global economy picks up as one likely factor behind the rise in the headline west German business climate index to 94.2 from a revised 92.0 in September. Although the increase reflected both better expectations for the future and a brighter assessment of the current situation, Ifo warned that Germany was not on the brink of a dramatic upturn. "It isn't a sign that a major boom or anything like that is on the way, because the situation itself is still very bad,'' Ifo economist Gebhard Flaig told Reuters after the closely watched monthly survey of 7,000 firms. Market reaction to the figures was relatively muted, indicating that traders do not expect the data to trigger any early increase in euro zone interest rates. The survey was welcome news to the German government, hit by a string of regional election defeats as it is driving through unpopular welfare reforms and tax cuts aimed at reviving growth. "This confirms the government's opinion that the trough has been passed,'' a ministry spokeswoman told Reuters. The improvement in the current conditions component of Ifo's index gives "reason for optimism,'' the spokeswoman said. HVB Group economist Andreas Rees said: "The upswing in Germany is getting under way. We hadn't seen that so far in the Ifo index at least.'' Ifo President Hans-Werner Sinn said the survey was consistent with forecasts from Germany's six main economic research institutes which saw a slight revival in the economy from the fourth quarter of the year. The survey comes after the government cut its 2003 growth forecast to zero last week and said the economy would grow by 1.5-2.0 percent next year, depending partly on whether its tax cut plans are approved by the upper house of parliament. Hopes for an upturn are based on optimism about exports as the world economy is set to pick up, and expectations that the government will implement much-needed reforms aimed at reviving growth, BDI industry federation chief Michael Rogowski said. "There are increasing signs that the economy in Germany is gradually passing through the trough,'' he said in a statement. SITUATION IMPROVING, NO BOOM YETThe rise in the Ifo index came after improved business confidence surveys for October from Belgium and the Netherlands, while strikes and a power blackout helped drive Italy's main business confidence index to a slight month-on-month fall. The Ifo index is compiled from two indexes, one on firms' view of their current conditions and the other on their expectations. The current conditions index had deteriorated in September, raising fears that sentiment was driven by expectations alone rather than any real improvement in the business environment. But the October current conditions index for western Germany rose to 81.1 from 79.2 in September. Future expectations picked up to 107.9 from 105.2. The east German business climate index rose to 104.7 from 104.0 as current assessments improved while expectations for the future dipped slightly. European Central Bank council members, including outgoing president Wim Duisenberg, said last week there were increasing signs of a gradual revival in the euro zone economy but firm signs of a pick up in Germany have only been sporadic so far. Ernst Welteke, head of the German Bundesbank said at the weekend the world economy appeared to be in recovery, although he said it was still questionable whether the U.S. economy could sustain growth. Europe's largest travel firm TUI AG said last week winter bookings had improved but the ZEW institute's survey of investor confidence fell for the first time this year in October as the stronger euro hit prospects for the key export sector. Germany's blue chip DAX index, which was up just 1.3 percent by 1145 GMT, extended gains slightly after the figures were announced but otherwise showed little reaction. Euro zone government bond futures briefly dipped after the survey results and the December Bund future was down 25 ticks on the day at 112.70. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
|
|
|||||||||||||||||||||||||||||||||||||||||||||
|
|
